Base oils supply flips to surplus in November for first time in three months.Base oils output stays high for fifth month, contrasting with dip in exports.Rebound in base oils margins at end-2025 could incentivize refiners to maintain high output..South Korea’s base oils supply exceeded domestic and export demand in November for the first time in three months, triggering a build-up of surplus volumes amid a seasonal slowdown in regional consumption. Total base oils supply, or output and imports combined, rose to more than 392,000 tonnes in November, Korea Petroleum Association data showed.The volume edged up from 391,000 tonnes in October to the third-highest level in fifteen months.Supply could remain elevated into the start of this year after a rebound in Asia’s base oils margins since the first half of November incentivized refiners to sustain high output levels.High output could put pressure on refiners to boost exports to contain any further supply-build..Key Highlights· Base oils output climbed to 2.77 million barrels (390,300 tonnes) in November, rising for a fourth month year on year to the third-highest level since July 2024.· The highest and second-highest output levels since then were in August and October.· Rising output contrasted with a drop in South Korea’s base oils exports to a six-month low in November..South Korea Base Oils Exports Slide to Six-Month Low in November.· Base oils output outpaced exports by the widest margin in ten months.· Total base oils supply flipped from a shortfall in September and October to its largest surplus since January 2025..· The surplus partially offset earlier shortfalls, signalling replenishment of lower stocks.· Restocking moves and the drop in exports helped slow the pace of a build-up of surplus supplies across Asia’s regional market..Market RepercussionsSouth Korea entered November with lower base oils stocks, giving refiners more flexibility to absorb higher output while trimming exports.The move curbed the pace of any build-up of surplus volumes in the wider Asian market..Asia’s October Base Oils Supply Falls to Three-Month Low.The pullback in exports could trigger a pick-up in regional demand as buyers seek to rebuild depleted stocks at the start of the new year.The lack of any demand recovery, combined with higher output, could conversely leave South Korean refiners facing a rapid build-up of surplus supplies.A rebound in base oils margins during the final weeks of 2025 could reinforce this dynamic by incentivizing refiners to maintain or raise production rates.
