Asia’s base oils exports extended their rise to a seventeen-month high in January, as firm demand across the region limited a seasonal build-up of surplus supply and left the market with less buffer against any unexpected drop in shipments.

Total exports rose to more than 700,000 tonnes in January, climbing from close to 690,000 tonnes in December to the highest since August 2024, according to various government data such as Enterprise Singapore and Korea Customs Service.

Firm demand from southeast Asia to India and the Middle East absorbed higher volumes, limiting downward pressure on regional base oils margins at a time of year when seasonal weakness typically weighs more heavily on prices.

Demand in Asia typically gets further support towards the end of the first quarter of the year as economic activity gathers pace after the winter months and Lunar New Year holidays.

New production capacity was expected to cover that pick-up with growing ease.

A drop in base oils production would by contrast leave the market tighter than expected, a scenario that shows signs of materialising as the Middle East conflict impacts crude prices and diesel margins as well as feedstock supplies for regional refineries.

Key Highlights

• January exports to Southeast Asia rose to an eighteen-month high of more than 210,000 tonnes, after shipments lagged the region’s demand in November and December.

• Exports of more than 150,000 tonnes to India dipped from over 160,000 tonnes in December but held above typical monthly levels of around 146,000 tonnes in 2025.

• Exports to China stayed elevated for a second month at a twenty-month high, adding to rising domestic base oils output in that market.

• Exports of more than 35,000 tonnes to the Middle East remained higher than usual even if down from record-high levels at the end of 2025.

Market Repercussions

Asia’s base oils supply-demand balance was unusually tight during the first half of 2025, when rising consumption coincided with lower output during an extended round of plant-maintenance.

This year was expected to see an improved balance, supported by a lighter maintenance schedule and capacity additions in markets like Singapore and India.

The improved supply incentivized blenders to maintain lean inventories and top up stocks regularly.

It also helped cover a sustained rise in consumption in India that kept blenders’ stocks tighter than usual.

Those lean stocks now leave the market with limited buffer against any unexpected drop in supply or shipment delays.

Growing concern over supply disruptions and rising prices could add to a wave of restocking demand, compounding any supply tightness.