Asia base oils demand outlook: Week of 6 October

·         Asia’s base oils demand could ease amid expectations that supply is likely to rise from already-healthy levels.

·         Signs of healthy inventory levels in China and southeast Asia curb further any urgency to buy.

·         Reversal of crude oil prices back to their medium-term range erodes further any pressure on prices to rise in response to squeezed margins.

·         Prospect of steady-to-lower prices adds to incentive for buyers to maintain lower stocks.

·         CFR India Group II N500 price-premium to FOB Asia cargo price falls sharply in early-Oct 2025.

·         Price-premium falls below narrow range it held in since early-April 2025.

·         Any extension of trend would cut attraction of moving more heavy-grade supplies to India.

·         Less attractive arbitrage to move Group II heavy grades to India would put pressure on suppliers in Asia to adjust their prices in response or to target other markets instead.

·         Squeezed price-premium could reflect rising availability of supply rather than major change in outright demand.

·         Rising availability, and buyers’ expectations that prices face more downward pressure, could still boost incentive to hold back to curb exposure to any such price adjustments. 

·         Signs of strong rise in base oils imports in recent weeks help to replenish buyers’ depleted stocks.

·         Replenished stocks curb further buyers’ urgency to lock in additional volumes.

·         Imports in first three weeks of Sept 2025 almost match total imports in all of Aug 2025.

·         Singapore’s base oils exports to India show signs of rising strongly in Sept 2025.

·         Rise in shipments could extend recovery in India’s imports into Oct 2025.

·         India’s imports rise in recent weeks after country’s base oils supply lags demand in Aug 2025 for second time in three months.

·         Rise in imports likely to replenish depleted stocks rather than leave stocks brimming.

·         More balanced stocks, and seasonal pick-up in lube consumption, could support additional demand for replenishment volumes.

·         Unlike heavy grades, India’s imported Group II light-grade cargo price-premium to FOB Asia cargo price holds in narrow range.

·         Steady price-premium points to ongoing buying interest in additional supplies.

·         Blenders could still prefer to keep stocks balanced rather than high, and to procure top-up volumes more frequently, in anticipation of improving supply in Asia during Q4 2025.

·         China’s base oils demand for overseas supplies could wane amid healthy availability in domestic market and prospect of slowdown in consumption through rest of Q4 2025.

·         Singapore’s base oils exports to China show signs of slowing in Sept 2025.

·         Any extension of slowdown in flows could be reflection of more muted requirements in China market.

·         China’s domestic Group I base oils prices extend strong rise vs FOB Asia cargo prices.

·         Rising domestic brightstock price-premium coincides with recent/current maintenance work at domestic plants that produce the heavy-grade base oils.

·         Even so, prospect of recovery in domestic supply and seasonal slowdown in demand could curb attraction of lining up arbitrage shipments to China.

·         Domestic Group I SN 400 price extends rise vs FOB Asia SN 500 cargo price despite availability of supplies for export.

·         Dynamic extends contrasting signals of widening price-premium pointing to tight fundamentals and export volumes pointing to surplus supply.

·         Japan’s base oils demand for overseas supplies could rise as extended fall in domestic output shows little sign of slowing.

·         Japan’s demand for overseas supplies could get further boost from sharp slump in domestic base oils consumption in Aug 2025.

·         Fall in Japan’s domestic base oils consumption outpaces fall in country’s lube consumption so far in 2025.

·         Extension of trend through Q3 2025 could boost domestic blenders’ requirements for base oils supplies from overseas markets to make up shortfall.

·         Ongoing fall in Japan’s base oils output and exports could trigger drop in demand in southeast Asia for its supplies.

·         Japan’s base oils exports to southeast Asia fall to nine-month low in Aug 2025.

·         Buyers’ requirements for key Group I products like brightstock had sustained buying interested in demand for supplies from Japan in recent years.

·         Recent start-up of new Group II unit in Singapore and of production of alternative product to Group I brightstock could cut need for those supplies from Japan.

·         Demand in southeast Asia could be more muted amid signs of mixed finished lube consumption and healthy availability of supply.

·         Thailand’s lube consumption falls in Aug 2025 for sixth month from year-earlier levels to lowest in more than five years.

·         Slowdown magnifies size of seasonal fall in consumption.

·         Ongoing slowdown in demand leaves blenders’ stocks lasting longer.

·         Ongoing slowdown incentivizes blenders to keep inventories at lower levels.

·         Weaker demand contrasts pick-up in supply, with Asia’s total exports to southeast Asia rising to thirteen-month high in Aug 2025.

·         Singapore’s base oils exports to southeast Asia stay at elevated levels in Sept 2025 even with slowdown in shipments in H2 Sept 2025.

·         High export volumes and slack demand curb urgency to lock in additional volumes.