Asia base oils demand outlook: Week of 11 August

·         Asia’s base oils demand could get support from moves to replenish stocks that were more balanced than expected at start of Q3 2025.

·         Blenders could be targeting additional supplies to cover seasonal rise in consumption in final weeks of Q3 2025.

·         Stocks could be more balanced than expected because of unusually strong rise in demand at end-Q2 2025.

·         Strong rise in demand leaves blenders with lower inventories heading into Q3 2025.

·         Strong rise in demand also leaves refiners with smaller overhang of surplus base oils supplies in early-Q3 2025.

·         More balanced fundamentals raise prospect of more range-bound base oils prices.

·         More range-bound base oils prices incentivize blenders to maintain rather than delay their procurement plans.

·         China’s base oils demand could get boost from round of stock-replenishment in coming weeks before seasonal rise in lube demand in final weeks of Q3 2025.

·         Signs of lower domestic base oils supply leaves blenders with lower stocks, raising prospect of stronger round of stock-replenishment.

·         Any such pick-up in demand could support firmer domestic base oils prices.

·         China’s domestic Group II light-grade base oils prices rise versus Shandong diesel prices and versus FOB Asia cargo prices in past week.

·         Domestic Group II N150 price-premium edges up after sustained weakness since June 2025.

·         Any extension of pick-up in N150 premium to diesel and to FOB Asia prices could reflect signs of moves to replenish stocks.

·         Length and extent of any pick-up in N150 premium would provide indication of strength of round of stock-replenishment.

·         China’s Group III base oils demand shows signs of persistent weakness.

·         China’s domestic Group III base oils price-premium to Group II light grades stays close to multi-year low in Aug 2025 even with drop in supply.

·         Any extension of Group III demand-weakness could force overseas suppliers to redirect even more shipments to other outlets instead.

·         China’s demand for Group III base oils from overseas markets already fell because of rise in its own domestic production. 

·         Any improvement in China’s base oils demand would coincide with signs of steady-to-firm requirements in other parts of Asia-Pacific region.

·         Steady requirements follow unusually strong rise in lube demand in northeast Asia and southeast Asia in June 2025.

·         Asia’s stronger demand leaves regional fundamentals tighter than usual throughout Q2 2025.

·         Steady-to-tighter fundamentals curb concern about major price-adjustments to clear surplus volumes around this time of year.

·         Philippines’ base oils/lube imports extend fall in June 2025, but contraction is smallest in four months.

·         Slowdown in pace of contraction mirrors similar trend in other markets in Asia in June 2025, adding to signs of regionwide recovery in demand.

·         Thailand’s demand for premium-grade base oils could be firmer at start of Q3 2025 as pick-up in domestic lube demand in June 2025 contrasts with slump in imports, especially from South Korea.

·         Fall in imports from South Korea coincides with maintenance work on Group III unit in that country in June 2025.

·         Thailand’s Group I base oils exports rise in June 2025 even with recovery in domestic lube demand.

·         Pick-up in exports enables buyers in Singapore especially to build stocks of Group I base oils ahead of plant-maintenance work in Thailand in Q3 2025.

·         Rise in Singapore’s Group I base oils imports from various markets in July 2025 and early this month could further cushion impact of Thailand’s plant-maintenance work.

·         Signs of stock-building in Thailand ahead of maintenance-work should leave sufficient supplies to cover domestic requirements in that market.

·         Stock-building can bring forward impact of plant-maintenance work, then curb impact during plant shutdowns.

·         Imminent restart of Group I unit in Thailand after maintenance work and subsequent pick-up in supply could curb buying interest in shipments from more distant markets.

·         India’s imported Group II N150 cargo price premium to FOB Asia prices rises to highest in more than a month.

·         CFR India N150 premium rises above CFR India N500 premium to FOB Asia prices for first time in almost two months.

·         Dynamic makes arbitrage for light grades more attractive.

·         CFR India N500 price-premium stays wide vs FOB Asia and US export prices even as it slips from recent highs.

·         Wide premium could reflect ongoing buying interest in additional supplies.

·         Falling premium could curb short-term demand amid concern about exposure to lower prices.

·         Ongoing buying interest likely reflects need to replenish low stocks and persistent difficulty in boosting inventories because of India’s growing lube consumption.

·         India’s lube demand rises in July 2025 to highest since month of March, when consumption got seasonal boost.

·         Rise in demand in month of July coincides with monsoon season, when rainy weather can dampen lube consumption.

·         Lack of any such slowdown in demand this year curbs opportunity for blenders to build stocks in preparation for seasonal pick-up in consumption at end-Q3.

·         Slowdown in shipments from Singapore to India in recent weeks could further complicate buyers' stock-replenishment plans.

·         Dip in shipments could reflect slowdown in Singapore’s base oils imports from markets like Europe in Q2 2025 and subsequent drop in re-exports of imported supplies.

·         Such a scenario could start to reverse following recent recovery in Singapore’s imports from Europe in recent weeks.