Asia base oils demand outlook: Week of 22 September

·         Asia’s base oils demand could turn more cautious amid signs of healthy availability and unusual change in trade flows.

·         Limited build-up of surplus supplies so far in Q3 2025 had eased concern about price-volatility, supporting steadier demand.

·         Buyers could instead limit their procurement plans amid unusual surge in Singapore’s base oils exports to southeast Asia in recent weeks.

·         Unusually steep rise in Singapore’s shipments follows pick-up in exports from key Asia suppliers to southeast Asia to thirteen-month high in Aug 2025.

·         Unusual rise in Singapore’s shipments to southeast Asia in recent weeks coincides with rare exports from Singapore to US and rise in shipments to Middle East in past week.

·         Rise in shipments to southeast Asia and unusual destination of other shipments could point to change in supply-dynamics in Singapore.

·         Change in trade flows could prompt buyers to hold back.

·         Surge in shipments to southeast Asia anyway likely leaves blenders with healthy stocks, curbing urgency to procure additional volumes.

·         China’s base oils demand could start to ease as rise in domestic output and more feasible arbitrage from Asia raise prospect of boosting buyers’ stocks.

·         Rise in supplies and stocks help to cover for seasonal rise in lube consumption at end-Q3.

·         Any signs of lower-than-usual seasonal pick-up in lube consumption would leave stocks lasting longer.

·         Seasonal boost in consumption typically starts to ease early in fourth quarter, raising prospect of removing that support for additional demand.

·         China’s domestic Group II light-grade price-premium to diesel prices steadies for second week.

·         China’s domestic Group II light-grade price-premium to FOB Asia N150 cargo price edges lower for first time in almost two months.

·         Steady or lower price-differentials, after recent gains, could point to price levels topping out.

·         Any extension of that price-trend would add to signs of supply-demand fundamentals starting to change.

·         India’s imported Group II cargo price-premium to FOB Asia/US prices holds firm.

·         Firm price-premium facilitates arbitrage from Asia and US, points to ongoing demand for additional supplies.

·         Demand holds firm even with rise in South Korea’s base oils exports to India in Aug 2025.

·         Rise in exports raises prospect of supporting revival in India’s base oils imports in Sept 2025.

·         Firm price-premium and steady demand suggests that supply-balance remains relatively tight even with pick-up in shipments from South Korea.

·         Ongoing signs of tighter supply follow dip in India’s base oils imports and rise in domestic lube demand in Aug 2025.

·         Lower imports and higher demand cut blenders’ stocks.

·         Dynamic leaves blenders requiring additional volumes to both replenish stocks and to meet expected rise in demand during upcoming festive season.

·         Demand in more distant markets for supplies from Asia could be more mixed.

·         Increasingly narrow gap between Group I and Group II heavy-grade prices in Middle East, and tighter availability of Group I base oils, could boost interest in securing more Group II heavy-grade supplies from Asia.

·         Demand for Group II light-grade base oils from Asia could face pressure as FOB Asia prices strengthen relative to prices in markets like India, northeast Asia and Americas.

·         Asia’s Group I heavy-neutrals prices show signs of more downward pressure than Group II prices.

·         FOB Asia Group I SN 500 price-discount to FOB Asia Group II N500 softens to widest level in more than a month.

·         Group I SN 500 price-discount to Group II N500 had narrowed steadily for almost five months to end-Aug 2025 before starting to reverse that trend in Sept 2025.

·         Ex-tank Singapore Group I SN 500 premium to FOB Asia SN 500 extends fall to lowest in almost three months.

·         Sliding premium contrasts with steadier ex-tank Singapore Group II N500 price-premium to FOB Asia price.

·         Firmer ex-tank Group II premium points to more muted pressure from persistent surplus supply throughout Q3 2025.

·         Weaker ex-tank Group I SN 500 premium points to growing pressure from oversupply even with pick-up in surplus volumes only materialising in recent weeks.