· Global base oils margins mostly hold at levels that sustain incentive for refiners to maintain high output.· Incentive for refiners to maintain high output puts pressure on global demand to remain sufficiently firm to absorb steady-to-higher supply.· Pressure on demand to hold firm coincides with time of year when demand typically starts to ease.· Any such demand weakness, combined with firm margins and high output, could speed up pick-up in surplus supply.· FOB Asia base oils prices hold firm in narrow range vs Singapore gasoil..· Firm base oils price-differentials incentivize refiners to maintain or raise output.· Sustained strength of base oils margins suggest that supply-demand fundamentals remain tight even with incentive to raise output.· Sustained strength of base oils margins, even after completion of plant-maintenance work, suggests that supply is structurally tight..· Sustained strength of base oils price-differentials could alternatively point to moves by refiners to manage output carefully despite the firm margins.· Sustained strength of base oils margins could face pressure in response to any marked rise in supply or fall in demand.· China’s domestic Group II N150 price-premium to Shandong diesel prices holds in narrow range for third week..· N150 price-premium remains elevated after strong rebound since mid-June 2025, incentivizing refiners to maintain higher base oils output.· Incentive to maintain higher base oils output through Q3 2025 coincides with seasonal rise in demand.· Ongoing pause in rise in N150 price-differential could point change in supply-demand fundamentals that supported its strong rebound.· China's domestic Group II N150 price-premium to diesel also rose strongly in Q3 2024, before beginning extended slide from end-Sept 2024..· CFR India Group II N70 price-premium to Singapore gasoil edges up, holds firm..· Price-premium holds at level that facilitates arbitrage flows from Asia to India and incentivizes overseas refiners to maintain or raise very-light-grade base oils output.· Price-premium that facilitates the shipment of more supply to India points to demand that remains sufficiently firm to absorb the supply..· Europe’s domestic Group I SN 150 price-premium to vacuum gasoil (VGO) extends fall to lowest since Feb 2025, and well below year-earlier levels..· Typical downward pressure on margins during final months of the year raise prospect of SN 150 margins extending their fall.· Any extension of fall would leave SN 150 margins increasingly close to levels that they bottomed out at several times since Q2 2023.· Any break in margins below those levels could point to change in supply-demand fundamentals vs previous years.· Increasingly weak SN 150 margins contrast with still-unusually-firm brightstock margins and relatively firm heavy-neutrals margins.· Firm heavy-grade margins could incentivize refiners to maintain steady or higher output.· Any such moves could add to light-grade supply, sustaining downward pressure on margins..· US Group II domestic heavy-grade price-premium to VGO extends fall to lowest since Q1 2021..· Price-premium extends fall that began in H1 2023.· Sustained fall in domestic price-premium contrasts with more rangebound Group II heavy-grade export-price premium to VGO.· Sustained pressure on domestic heavy-grade margins points to persistent surplus-supply.· Sustained pressure on domestic heavy-grade margins points to price differentials that remain at levels that incentivize refiners to maintain high output.· Steadier export heavy-grade margins, despite persistent domestic surplus, points to sufficiently-firm overseas demand to absorb the supplies..Asia base oils demand outlook: Week of 22 September.Asia base oils supply outlook: Week of 22 September.Global base oils margins outlook: Week of 15 September.Base Oil News stories and analysis also available on ICIS platform
