· Asia’s base oils demand could ease as lower crude oil prices curb prospect of refiners adjusting output or raising prices.· Prospect of seasonal slowdown in consumption and rise in surplus supply in coming weeks adds to incentive to hold back and to procure top-up supplies on need-to basis.· Demand for Group II heavy grades could get support from concern about tighter availability of Group I heavy neutrals because of upcoming plant-maintenance in southeast Asia and uncertainty about stability of flows from Iran..· China’s base oils demand shows signs of holding firmer for heavy grades than light grades.· China’s domestic Group II heavy-grade price premium to FOB Asia N500 cargo price rises to highest since start of 2025..· Higher premium makes arbitrage more feasible.· China’s Group II N500 price also rebounds vs Group II light grades, vs Group I heavy neutrals and vs domestic diesel prices.· Any extension of sudden outperformance of China’s Group II heavy-neutrals price could point to change in supply-demand fundamentals that support firmer market dynamics.· Any such pick-up in supply-demand fundamentals would be at a time of year when demand usually faces a seasonal slowdown.· China’s base oils demand already falls in May 2025 from year earlier for sixth time in seven months to close to lowest since Aug 2024..· Shrinking demand from year-earlier levels would magnify likely seasonal slowdown in consumption in third quarter of the year.· Lower demand, and likely pick-up in domestic base oils production following round of plant-maintenance work, could sustain downward pressure on requirements for supplies from overseas markets.· Recent rise in domestic Group II N500 price premium conversely supports pick-up in requirements from overseas markets..· Demand in southeast Asia could be more muted ahead of typical seasonal slowdown in lube demand and expected pick-up in supplies of premium-grade base oils.· Demand in southeast Asia for supplies outside the region could face even more pressure amid rise in Singapore’s base oils exports to southeast Asia in recent weeks..· Rise in exports, and any slowdown in demand, would leave shipments from Singapore covering larger share of blenders’ requirements..· India’s CFR Group II light-grade price-premium to FOB Asia N150 cargo price recovers; heavy-grade premium holds firm..· Firm CFR Group II price-premiums through Q2 2025 contrast with slump in price-premium in Q2 2024, point to stronger supply-demand fundamentals this year.· Firm CFR Group II price-premiums to FOB Asia prices point to ongoing buying interest in additional supplies even as more plant-maintenance in Asia draws to a close.· Firm CFR Group II price premiums coincide with larger-than-usual base oils imports in recent months.· South Korea’s base oils exports to India stay high in May 2025 for fourth month..· High exports from markets like South Korea and Singapore raise prospect of sustaining India’s base oils imports at more elevated levels in June 2025.· Demand could ease in coming weeks for supplies from sources with shorter shipment time, like southeast Asia and Middle East, as consumption slows during monsoon season.· Demand could stay firmer for supplies from sources with longer shipment time, such as US, for cargoes that would reach India later in Q3 2025.· Demand typically rises around that time, when blenders start to build stocks ahead of festival season.· Firm CFR India Group II heavy-grade price-premium to FOB Asia cargo prices could also point to additional buying interest in Group II supplies in response to concern about disruption to base oils exports from Iran.· India’s Group I heavy-grade imports already fall to five-month low in May 2025, when plant-maintenance in Iran curbs flows from Middle East..· Drop in Group I supplies forces buyers to cover more heavy-grade requirements with Group II base oils, despite their steep price-premium to Group I base oils.· Dynamic leaves Group II heavy grades accounting for unusually large share of India’s heavy-grade imports in May 2025..· Any extension of that trend could cushion impact of seasonal slowdown in demand at start of Q3 2025..India’s May heavy-grade base oils imports mixed.China’s May base oils demand falls.Asia base oils demand outlook: Week of 23 June.Global base oils margins outlook: Week of 23 June
