Simultaneous rise in domestic consumption and exports boost total demandJump in exports despite firm domestic demand points to more muted requirements for Group I suppliesRise in exports adds to pick-up in surplus Group I supply in Asia at end-2025.Japan’s base oils demand rose in November for the first time in ten months, supported by a simultaneous increase in domestic consumption and overseas shipments.Total demand, or consumption and exports combined, rose by 4% year on year in November to 174,500 kilolitres (155,000 tonnes), Ministry of Economy, Trade and Industry data showed..The increase in demand was the first since last January.Higher demand contrasted with an extension of the multi-year decline in Japan’s base oils supply that largely mirrored the downturn in demand during that time.A sustained recovery in consumption could prompt a subsequent adjustment in supply to meet higher requirements.Any such dynamic would likely favour imports of premium-grade base oils rather than domestic Group I supplies..Key Highlights· Domestic base oils/lube demand rose by 2% year on year in November, marking a second monthly increase and pointing to a more durable recovery in consumption.· The improvement in consumption preceded an expected recovery in Japan’s industrial production in December 2025 and January 2026.· Japan’s base oils exports rose by 18% in November, increasing for the first time in six months to the highest since last May.· Exports rose at a time of year when Asia’s base oils demand typically slows, suggesting the pick-up in shipments was more likely aimed at clearing surplus volumes rather than meeting stronger overseas demand..Asia’s October Lube Demand Mixed.· Exports rose despite firmer domestic demand, suggesting imported premium-grade supplies met a larger share of the country’s requirements.· The rise in exports added to a build-up of surplus Group I supplies across Asia at end-2025.· Japan’s base oils supply fell by 1% year on year to 188,600 kilolitres, slipping for the ninth time in ten months and cutting the country’s surplus to a four-month low..Japan’s October Base Oils Supply Jumps To One-Year High.Market RepercussionsA sustained recovery in Japan’s domestic base oils consumption would boost the country’s need for additional supplies and be more supportive for premium-grade base oils producers, particularly exporters such as South Korea.Stronger demand would likely have a more limited impact on requirements for domestic supplies of Group I base oils.Even so, Asia’s Group I base oils prices held firm relative to gasoil during the final weeks of last year, incentivizing the region’s Group I refiners to maintain higher operating rates despite softer seasonal demand.
