Supply falls on lower output in southeast Asia, India
Lower supply balances out weaker demand, keeping surplus manageable
Prospect of recovery in supply and new production could trigger larger surplus even if demand grows
Asia’s base oils supply fell to a three-month low in October as lower output in southeast Asia and India outweighed rising production in South Korea.
Total supply fell to less than 930,000 tonnes, down from a fourteen-month high of over 975,000 tonnes in September, government data showed.
Supply still rose by 4% and for a third month from year-earlier levels, contrasting with the prolonged output dip in the first half of 2025.
Lower output and steady demand during that period left Asia’s market fundamentals unusually tight, limiting available supplies and reducing the need for arbitrage shipments to distant markets.
Rising regional output in the second half of the year made strong demand growth critical to absorb additional supply.
The October dip cushioned the impact of a fall in the region’s lube consumption from September, keeping surplus volumes manageable.
The drop in supply mostly reflected temporary production issues, particularly in Indonesia.
A resumption of normal production in Indonesia and the recent pick-up in supply from Singapore could boost volumes in the coming months.
The expected start-up of new production capacity in India would further increase supply.
These dynamics could trigger a rise in Asia’s surplus even if regional demand continues to grow.
Supply and prices in Asia and in other regions would need to adjust accordingly in response to these evolving fundamentals.