Asia base oils demand outlook: Week of 8 September

·         Asia’s base oils demand could be more cautious amid expectations of healthy availability of supply within the region and in other markets.

·         Signs of more manageable build-up of surplus supplies in July-Aug 2025 curb pressure on refiners to make sharp price adjustments to clear volumes.

·         Signs of pick-up in availability of supplies in other markets could still put pressure on regional refiners to adjust prices to stay competitive.

·         Healthy availability of supply and concern about exposure to lower prices incentivize buyers to procure smaller volumes more frequently.

·         Asia’s Group I base oils demand shows signs of softness.

·         Asia’s Group I base oils prices and margins hold in narrow range so far in Q3 2025 despite sharp drop in supply in early-Q3.

·         Steady price levels and lower supply point to slack demand, keeping fundamentals relatively balanced.

·         Ex-tank Singapore Group I SN 500 price-premium to FOB Asia cargo price begins to fall from H2 Aug 2025, with slide extending into Sept 2025.

·         Drop in price-premium coincides with restart of Group I unit in Thailand after plant-maintenance work.

·         Drop in SN 500 price-premium contrasts with sustained rise in ex-tank Group II N500 price-premium to FOB Asia cargo price from June to late-Aug 2025.

·         Ex-tank N500 price-premium extends rise despite steady rise in surplus supply throughout Q3 2025.

·         Dynamic suggests ex-tank Group I SN 500 price-premium responds faster to rise in supply than Group II N500 price-premium does.

·         Dynamic could reflect firmer underlying demand for Group II N500, cushioning impact of rise in supply, and weaker underlying demand for Group I SN 500, magnifying impact of rise in supply.

·         Concern about further pressure on Group I SN 500 prices could add to slowdown in demand.

·         Demand in southeast Asia could stay more muted as steady exports to the region contrast with signs of weaker lube consumption in July 2025.

·         Dynamic would likely leave blenders with larger stocks ahead of seasonal rise in demand at end-Q3.

·         Thailand’s lube consumption falls to two-year low in July 2025.

·         Slump in demand cushions impact of plant-maintenance work in Thailand, magnifies impact of surge in imports.

·         Thailand’s base oils imports exceed domestic demand in July 2025 for first time in almost three years.

·         Rise in surplus supply, and concern about extension of demand-weakness, likely to prompt blenders to work down inventory-overhang before seeking replenishment stocks.

·         Even then, concern about demand outlook could incentivize blenders to keep stocks at lower levels.

·         Philippines’ base oils and lube imports fall in July 2025 for fifth month and at fastest pace in two years.

·         Timing of dip in imports in recent months coincides with US moves to levy high import tariffs.

·         Singapore’s base oils exports to southeast Asia continue to hold steady in narrower range in recent weeks, even if down from levels in May-June 2025.

·         Steady flows from Singapore, combined with any slowdown in regional requirements, could curb buying interest in supplies from other key sources like South Korea.

·         China’s base oils demand could wane if end-user lube consumption stays muted following signs of large round of stock-building.

·         China’s base oils output rebounds to ten-month high in Aug 2025.

·         Rise in output and firm Group II light-grade margins coincide with ongoing rise in domestic light-grade price-premium to FOB Asia cargo prices.

·         Wide premium facilitates arbitrage flows, raising prospect of attracting additional supplies.

·         China’s lube demand would need to see similarly-strong pick-up to absorb replenished stocks as well as any additional supplies.

·         More muted demand would conversely leave stocks lasting longer, curbing for longer any need to replenish those stocks.

·         Singapore’s base oils exports to China extend fall over last four weeks.

·         Dip in shipments could reflect more muted demand from term buyers.

·         India’s base oils demand for supplies from US and Europe could rise amid more feasible arbitrage.

·         CFR India Group II N500 price-premium to FOB US export price holds at widest level in more than a month.

·         CFR India Group I SN 500 price flips to premium to FOB Europe export price in early-Sept 2025 for first time since April 2024.

·         Increasingly firm CFR India price-differentials boosts attraction and feasibility of lining up more shipments from US, and even from Europe.

·         India’s base oils demand for shipments from those markets could conversely ease in short term amid concern about any further fall in US and Europe outright prices.

·         Any such moves to hold back could face pressure from prospect of firm underlying demand to replenish stocks ahead of seasonal pick-up in lube consumption.

·         Dynamic leaves buyers facing challenge of covering requirements while minimizing their exposure to any further fall in prices in US and Europe.

·         Buyers could target lower CFR India prices to cover against such exposure.