Asia base oils demand outlook: Week of 20 October

·         Asia’s base oils demand could stay more cautious as lower crude oil prices coincide with improving supply of most base oils grades.

·         Lower crude prices and rising supply increase concern about exposure to further downward pressure on base oils prices.

·         Signs of healthy stocks in all key regional markets give buyers flexibility to hold back until they are comfortable that any price-adjustments have been completed.

·         China’s base oils demand shows signs of holding relatively steady at a time of year when it typically starts to ebb.

·         China’s domestic Group II light-grade price rises vs Shandong diesel prices, holds firm vs FOB Asia cargo price.

·         Firm or rising domestic Group II light-grade price-premium contrasts with sliding price-differential the same time a year earlier.

·         Group II light-grade price-premium stays firm even with unusually high base oils output in China in Aug-Sept 2025.

·         China’s domestic Group I SN 400 price-premium to FOB Asia Group I SN 500 cargo price extends rise to highest in more than a year.

·         Rising domestic SN 400 premium points to tight supply-demand fundamentals, leaves arbitrage increasingly feasible.

·         Open arbitrage to move cargoes to China coincides with offers of Group I SN 500 supplies from China into Asia cargo market.

·         Offers of Group I SN 500 cargoes for export point to surplus supply in China.

·         Demand in southeast Asia could stay cautious amid healthy inventories and rising availability of supply.

·         Exports to southeast Asia from Asia’s largest suppliers edge up to fourteen-month high in Sept 2025, from thirteen-month high in Aug 2025.

·         Exports remain elevated as rise in shipments from Singapore and Taiwan balance out dip in supplies from South Korea.

·         Elevated export volumes likely keep buyers’ stocks at healthy levels.

·         Singapore’s base oils exports to southeast Asia over last four weeks extend fall to lowest level in five months.

·         Dip in shipments could reflect buyers’ healthy stocks and moves to work down those existing supplies.

·         South Korea’s base oils exports to Middle East rebound in Sept 2025, contrasting with dip in shipments to southeast Asia.

·         Trade flows add to signs of more muted demand in southeast Asia.

·         South Korea’s base oils exports to India rise to sixteen-month high in Sept 2025.

·         Rise in shipments points to stronger demand in India than in southeast Asia.

·         Rise in exports to Middle East, even with surge in shipments to India, could point to signs of India’s demand starting to top out.

·         Any such pause or slowdown in India’s requirements would follow jump in its imports in Sept 2025.

·         Rise in imports replenishes blenders’ low stocks, curbing need to line up another large wave of shipments.

·         Rise in imports mostly reflects surge in shipments from South Korea.

·         Imports from Singapore could also extend rise in coming months following recent start-up of new base oils unit in that country.

·         Singapore’s base oils exports to India over past four weeks already extend rise to highest since H1 July 2025.

·         Rise in imports from key sources in Asia could cushion impact of any slowdown in shipments from Saudi Arabia in Q4 because of plant-maintenance work.

·         Rise in imports from key sources in Asia could also curb demand for paraffinic base oils supplies from US.

·         India’s paraffinic base oils imports from US surge in Aug 2025 before slumping in Sept 2025.

·         Opportunity for US suppliers to tap India as outlet for surplus paraffinic base oils volumes could fade amid rise in supply in Asia, and shortly, in India.

·         India’s imported Group II light-grade price-premium to FOB Asia cargo price edges up to four-month high.

·         Firm light-grade price-premium contrasts with recent dip in Group II heavy-grade premium to FOB Asia cargo price.

·         Light-grade price-premium stays higher even as surge in India’s imports of Group II light grades in Sept 2025 help to replenish blenders’ low stocks.

·         Wider light-grade price-premium than heavy-grade premium could reflect more prolonged pick-up in imports of heavy grades, and wider availability of heavy grades beyond Asia.

·         Asia by contrast remains key source of India’s Group II light-grade imports, with more limited competition from other markets.