Asia base oils demand outlook: Week of 16 June

·         Asia’s base oils demand could get support from surge in crude oil prices and concerns about disruptions to supply in Middle East.

·         A sustained rise in crude oil prices would squeeze base oils margins.

·         Lower margins could curb downward pressure on prices.

·         Prospect of steady-to-firmer prices could instead support steadier demand from buyers that had been concerned about exposure to lower prices.

·         Concern about supply disruptions could provide additional support, especially for heavy grades and Group III base oils.

·         Higher crude prices and supply concerns coincide with upcoming seasonal slowdown in demand and improving supply in many markets following completion of most plant-maintenance work.

·         Buyers face challenge of managing simultaneously those contrasting factors that could result in growing surplus or in tighter-than-expected supply.

·         China’s base oils demand for overseas supplies could wane as domestic supply rises following completion of more plant-maintenance work.

·         China’s domestic Group II N150 premium to FOB Asia cargo price instead holds firm after rising steadily from early-March 2025.

·         Firm Group II N150 premium facilitates arbitrage, points to ongoing demand for additional supplies.

·         Firm Group II N150 premium contrasts with ongoing fall in N500 premium to FOB Asia cargo price, pointing to weaker buying interest in heavy-grade supplies.

·         Healthy availability and seasonal slowdown in requirements could curb demand in southeast Asia.

·         Singapore’s base oils exports to southeast Asia over last four weeks extend slide after rising strongly in month to mid-May 2025.

·         Dynamic could point to slowdown in requirements following completion of stock-replenishment.

·         Thailand’s lube demand falls for second month in April 2025 from year-earlier levels.

·         Slowdown adds to drop in consumption in other Asia-Pacific markets like Japan, South Korea and Philippines in April 2025.  

·         Asia’s lube demand duly falls in April 2025 for first time in five months.

·         Slowdown in demand magnifies seasonal drop in consumption at start of second quarter of the year.

·         Slowdown in domestic demand in markets with base oils plants frees up more supplies to build or replenish stocks, or for shipment to overseas markets.

·         Slowdown in demand cushions impact of regional plant-maintenance work in Q2 2025.

·         Slowdown in demand eases concern about availability of supply, instead boosts attraction of holding lower inventories.

·         Any extension of slowdown in demand through to end of second quarter and start of third quarter would magnify seasonal slowdown in consumption during summer months.

·         India’s imported Group II N150 base oils cargo price premium to FOB Asia cargo price narrows in June 2025.

·         Narrower premium coincides with signs of weaker supply-demand fundamentals.

·         India’s lube demand falls in May 2025 for second month and at fastest pace since late-2022.

·         Weaker lube demand leaves blenders’ stocks lasting longer, curbs urgency to replenish stocks and instead incentivizes them to maintain lower inventories.

·         Base oils demand typically gets boost ahead of monsoon season as blenders build stocks to limit exposure to any weather- or logistical-related disruptions.

·         Falling lube demand and larger-than-expected inventories could curb such moves.

·         More muted demand contrasts with prospect of improving supply in Asia, Middle East and US in coming months.

·         Dynamic boosts buyers’ leverage to target prices at levels that provide sufficient incentive to lock in additional supplies.

·         Pakistan’s base oils supply rises in three months to April for ninth straight month from year-earlier levels.

·         Sustained flow of shipments from US taps that rising supply, triggering surge in its share of Pakistan’s base oils imports.

·         US’ share of Pakistan’s Group II heavy-grade imports similarly rises sharply.

·         US’ rising share of Pakistan’s Group II heavy-grade supplies puts pressure on refiners in Asia to line up alternative outlets for their supplies.