· Asia’s base oils demand likely to weaken in face of seasonal slowdown in consumption and rise in supply.· Drop in lube demand likely to gather pace from start of Q3 2025..· Drop in demand could be larger than usual because of weaker-than-expected economic growth.· Expectations of lower demand and improving supply coincide with firm base oils margins that reflect tighter supply-demand fundamentals.· Concern about any adjustment in prices to reflect change in supply-demand fundamentals could add to preference to hold back..· FOB Asia Group II N500 price-premium to Group I SN 500 falls to narrowest in six months..· Narrowing premium points to changing supply-demand fundamentals for the two grades.· Narrowing premium follows sustained surge in Group II N500 price relative to gasoil and relative to other grades since summer 2024..· China’s base oils demand rises in April 2025 from year-earlier levels for first time in six months..· Higher demand contrasts with signs of weaker buying interest in other markets in Asia.· Higher demand, and firm industrial output growth, points to muted immediate impact of trade war with US.· China’s rising Group II base oils prices versus diesel and FOB Asia cargo prices so far in Q2 2025 already pointed to relatively firm supply-demand fundamentals..· Demand could get further support from temporary truce in China-US trade war.· Demand could still face pressure from uncertainty about US trade tariff policy in coming months.· Demand anyway faces seasonal slowdown from end of second quarter.· Demand for overseas supplies could face additional pressure following completion of most plant maintenance in China.· China’s firm Group II N150 premium to FOB Asia cargo prices has yet to reflect any such pressure. .· Dip in southeast Asia’s lube consumption at end-Q1 2025, slower-than-expected economic growth and seasonal slowdown in demand from end-Q2 2025 likely to limit buying interest in the region.· Even so, Singapore’s base oils exports to southeast Asia stay higher over last four weeks after fall in shipments during April 2025..· Any buying interest likely to remain restricted to procurement of term volumes and replenishment of low stocks after slowdown in demand in early-Q2 2025.· Singapore’s base oils exports to India by contrast fall sharply over last four weeks.· Drop in shipments could point to slowdown in buying interest in the country..· India’s CFR Group II N500 price premium to FOB Asia cargo price extends rise, holds firm vs US export price..· Unusual rise in Group II heavy-grade premium to FOB Asia cargo price, and ongoing strength of premium to US export price, contrasts with more typical dip in price premium around this time of year.· Rising price premium follows slump in India’s heavy-grade base oils imports to four-month low in April 2025..· Lower imports and domestic plant-maintenance work complicate blenders’ plans to replenish lower stocks.· Supply likely to improve in coming weeks following expected completion of most domestic and overseas plant maintenance.· India’s Group II light-grade premium to FOB Asia cargo price also rises in Q2 2025 despite surge in imports of light and very-light grade base oils in April 2025..· India’s light-grade price-strength points to other factors supporting light-grade prices.· India’s very-light-grade cargo price-discount to country’s domestic diesel price extends rise in May 2025 to highest this year..· Wide spread between domestic diesel price and imported light-grade cargo price often coincides with firmer demand for light-grade base oils..China’s April base oil demand holds firm.India’s April heavy-grade imports fall.Asia base oils demand outlook: Week of 19 May
