· Asia’s base oils demand shows signs of facing weaker-than-usual pressure from expected seasonal slowdown in consumption coming weeks.· Firmer prices for light grades relative to heavy grades, for Group I SN 500, and for prices in India point to ongoing pockets of buying interest even with seasonal slowdown in demand.· Prices for Group II heavy grades by contrast weaken vs light grades and vs Group I base oils.· FOB Asia Group II N500 premium to SN 500 slips to eight-month low in H1 July 2025..· Shrinking Group II heavy-grade premium reflects combination of softer Group II heavy-grade supply-demand fundamentals and firm Group I SN 500 fundamentals.· Any extension of that dynamic, and more competitive prices for Group II heavy grades, could conversely start to spur firmer demand for the product..· Prospect of seasonal slowdown in Asia’s lube demand in coming weeks would follow unusually firm consumption in recent months.· Asia’s lube demand falls in May 2025 from year-earlier levels but extends steady upward trend in recent years..· Firm consumption in first five months of 2025 contrasts with squeezed base oils output, curbing build-up of surplus supplies.· Lack of any significant surplus curbs pressure on significant price-adjustment to clear those volumes.· Prospect of steadier prices could support steadier consumption in Asia and in more distant markets like Middle East..· China’s demand for base oils from overseas markets could get boost from lower domestic base oils output that fell to twenty-one-month low in June 2025.· China’s domestic Group II price for imported supplies continues to outpace prices for domestic supplies..· Wider price-premium for imported supplies typically triggers rise in demand for supplies from domestic sources.· Any extended slowdown in China’s domestic base oils output could curb availability, complicating any such moves.· China’s domestic Group II price for imported supplies maintains steep premium to FOB Asia cargo prices..· Steep premium sustains feasibility of moving more regional cargoes to China.· Any extension of that trend could cushion impact of typical seasonal slowdown in demand in other parts of Asia..· Any such pick-up in shipments to China so far shows little sign of materializing.· Singapore’s base oils exports to China extend sharp slide over last four weeks..· Any extended slowdown in Singapore’s exports to China, combined with its lower domestic output, could squeeze supply more than expected.· Any such drop in supply would coincide with seasonal slowdown in China’s demand in month of July especially.· Lower-than-expected supply could limit any build-up of surplus volumes, boosting strength of round of stock-replenishment later in Q3 2025..· Singapore’s base oils exports to southeast Asia also extend fall over last four weeks..· Slowdown coincides with signs of sharper slowdown in lube consumption in some markets in that region.· Vietnam and Philippines base oils/lube imports fall in May 2025 for third straight month, reflecting that dynamic..· India’s base oils demand shows signs of holding relatively firm even at a time of year when country's lube demand faces seasonal slowdown.· India’s imported Group I SN 500 cargo price outperforms Group II heavy grades, as well as Group I heavy-neutrals prices everywhere from Asia to Europe..· Outperformance of CFR India Group I SN 500 price points to increasingly firm fundamentals for the grade.· Outperformance of Group I SN 500 price could point to concern about tighter availability of supplies from Middle East..· India’s imported Group II heavy-grade cargo price premium to FOB Asia price matches highest in more than a year..· Higher premium points to ongoing buying interest, sustains attraction of moving more shipments to India.· Ongoing buying interest contrasts with fall in India’s lube demand in June 2025 and in Q2 2025 from unusually high levels a year earlier.· India’s lube demand still holds at second-highest level for month of June and for second quarter in more than a decade..· Firm demand leaves India’s lube demand in H1 2025 at highest level for that period in more than a decade.· Rising demand contrasts with steady domestic base oils output, leaving country more reliant on additional imports to cover requirements.· Dynamic likely to continue until domestic consumption falls or new production capacity starts up in India.· Domestic consumption more likely to extend rise rather than fall.· New production capacity in India scheduled to start up in Q4 2025, after initial start-date of earlier this year pushed back.· Any further delays to start-up of new capacity would increase further India’s reliance on overseas markets to cover growing domestic requirements..· Pakistan’s base oils demand could hold firm as drop in supply in recent months contrasts with signs of rising lube consumption.· Pakistan’s base oils supply in three months to May 2025 falls to seven-month low..· Lower supply contrasts with sustained rise in country’s lube consumption..· Dynamic raises prospect of pick-up in demand for base oils supplies to replenish squeezed inventories.· Competition among overseas suppliers intensifies to meet Pakistan’s base oils demand.· Surge in shipments from Taiwan to Pakistan in 2025 follow sustained pick-up in shipments from US to Pakistan in 2024-2025.· Rise in shipments cuts Singapore and South Korea’s share of Pakistan’s base oils imports to less than 55% of total in 2025, down from 80% in 2024..· Competition for market share could intensify further when new production-capacity starts up in Asia in coming months..Asia’s May lube demand falls.China’s June base oils output falls.India’s June lube demand stays high.Pakistan’s May base oils supply slips.Asia base oils demand outlook: Week of 7 July
