Asia’s lubricants demand rose to a three-month high in December, adding to strong fourth-quarter consumption that helped regional refiners limit a build-up of surplus base oils supplies at year-end.

Total lubricants consumption rose to more than 920,000 tonnes in December, up from over 850,000 tonnes in November and 13% higher year on year, government data showed. The volume excluded China.

The pick-up in regional demand coincided with unusually strong requirements in the Middle East, further easing pressure on Asia refiners to target more distant markets with surplus shipments.

Key Highlights

·         December demand rose for a sixth straight month year on year, lifting fourth-quarter consumption above 2.65 million tonnes, the highest since the second quarter of 2024.

·         Lubricants demand rose simultaneously in Northeast Asia, Southeast Asia and India for the first time in three months, reducing reliance on any single market.

·         Southeast Asia’s fourth-quarter consumption exceeded 580,000 tonnes, rising 7% year on year to the highest level in at least six years.

·         Strong fourth-quarter demand coincided with a record surge in Asia’s base oils exports to the Middle East, absorbing surplus regional supply.

·         Asia’s full-year lubricants consumption climbed above 10.3 million tonnes, up 4% year on year and rising for a third straight year.

Market Repercussions

Stronger demand across Asia and the Middle East absorbed more base oils supply, cutting pressure on regional refiners to target more distant markets such as the Americas and Europe.

At the same time, signs of sufficient regional supply limited the need for additional inflows from other major producers.

A slowdown in US shipments to India in the three months to November reflected that dynamic.

Europe Group I base oils export prices also strengthened versus India prices during the final weeks of 2025 and early this year, cutting the feasibility of arbitrage shipments into Asia.