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Imports from Indonesia and Malaysia pause in December, an unusual simultaneous halt for the first time in years
Imports from Bahrain and the UAE fall to the lowest in a year, dropping below summer-maintenance levels
Tighter supply offsets weaker year-end demand, supporting stronger Europe Group III pricing in the fourth quarter
Europe’s Group III base oils supply fell in December to its lowest level in almost two years, tightening market fundamentals and offsetting the usual seasonal demand slowdown at year-end.
Total Group III supply fell to around 100,000 tonnes in December, down from nearly 140,000 tonnes in November and 6% lower year on year, government and port data showed.
Supply fell because of an unusual and simultaneous slump in shipments from the Middle East and Asia, Europe’s two main overseas sources for Group III base oils.
Key Highlights
· Asia imports fell to a twenty-eight-month low, as shipments from Malaysia paused for the first time since early 2020.
· Supplies from Indonesia halted for the first time in eighteen months, after production issues prompted the shutdown of a Group III unit in October.
· Combined imports from Bahrain and the UAE dropped below 10,000 tonnes for the first time in a year, falling to levels even lower than during summer-maintenance shutdowns in the two countries.
· Fourth-quarter supply fell to around 370,000 tonnes, down from 450,000 tonnes in the third quarter and the lowest since first-half 2024, when weak prices cut the incentive to move supplies to Europe.
· Full-year 2025 supply reached around 1.64 million tonnes, up 8% from a four-year-low in 2024, but still within in the narrow range seen since 2020.
Market Repercussions
Europe’s Group III prices strengthened in the fourth quarter versus feedstock prices, other base oils grades and other regions, reflecting tighter supply-demand fundamentals.
The drop in Middle East shipments compounded the tightness, as a wave of shipments from the region moved instead to the US, despite Group III prices there trading at a steep discount to Europe price levels.
The same dynamic showed signs of extending at least through January.
Flows from Asia by contrast are likely to recover. Regular shipments from Indonesia resumed in November, with cargoes reaching Europe in each of the first three months of this year.
Shipments from Malaysia could remain lower, following a pause in exports from the country to Europe in October and December.
