China’s April base oils output remained near multi-year highs, leaving domestic blenders better cushioned than other Asian markets from global supply disruptions
Strong Group II production reduced China’s exposure to surging import prices and tightening supply across global markets
Domestic Group III prices surged relative to Group II prices, pointing to tighter availability and increasing the incentive for refiners to raise Group III output
China’s base oils output stayed elevated in April for a fourth straight month, supporting stable domestic Group II supply while exposing China’s continued reliance on imported Group III volumes.
Total paraffinic base oils output fell to close to 580,000 tonnes in April, down from a more-than-six-year high of 630,000 tonnes in March, OilChem China data showed.
The April volume was still the second-highest since March 2021.
Persistently high output since the start of the year boosted supply to meet a seasonal rise in lubricants demand, contrasting with tighter supply-demand fundamentals elsewhere in Asia.
The higher volumes gave China a larger buffer against global supply disruptions since end-February, leaving domestic blenders with stable feedstock supply and normal operations.
Key Highlights
· Group II base oils output was the second-highest since March 2021, even as it fell from a multi-year high in March.
· Group III output edged lower, holding well below levels reached in late 2024 and early 2025 amid signs of plant maintenance work.
· Group I base oils output fell to a multi-year low, cutting its share of total output to the lowest since 2021.
Market Repercussions
China’s domestic Group III base oils prices surged relative to Group II in April to a multi-year high, rebounding from a multi-year low before March.
The scale and speed of that move pointed to tight global Group III supply extending to China, with that product most affected by the disruption to Middle East shipments from end-February.
China’s reliance on Group III imports for a large share of its requirements left it more exposed to surging global prices for those supplies, increasing the incentive for domestic refiners to raise output of the product.
The price-surge and exposure to overseas markets contrasted with its growing self-sufficiency in Group II, muffling the impact of surging global prices for that grade.
The domestic Group II light-grade price widened to a discount to Asia cargo prices by mid-April, from a premium of more than $500/tonne little more than a month earlier.