· Global base oils prices hold at levels versus feedstock and competing fuel prices that sustain incentive for refiners to maintain or raise output.· Margins hold firm even at time of year when surplus supply typically starts to build amid seasonal slowdown in demand.· Firm margins could point to supply-demand fundamentals that are tighter than usual for time of year.· Firm margins, combined with supply-demand fundamentals that are more typical for time of year, could alternatively trigger larger rise in surplus supply..· FOB Asia base oils cargo price-premium to Singapore gasoil holds firm..· Firm price-premium points to still-tight supply-demand fundamentals even after completion of most plant-maintenance work and signs of improving surplus supply.· Firm price-premium incentivizes refiners to maintain or raise output.· Firm price-premium and any such moves to maintain higher output increase importance of strong demand to absorb the supplies.· Firm price-premium and demand that is insufficient to absorb the supplies could speed up rise in surplus volumes..· Domestic China Group II N150 price-premium to Shandong diesel extends rise since early-Aug 2025, after staying unusually low in July 2025..· Higher margins coincide with time of year when demand typically gets boost ahead of seasonal pick-up in consumption at end-Q3.· Margins show signs of staying weaker than usual for some products like Group II light grades and firm for other products like Group I and Group II heavy grades.· Any extension of dynamic could point to more mixed fundamentals, depending on the base oils grade..· CFR India Group II N70 price-premium to Singapore gasoil stays high even as it edges lower after recent surge over past month..· Firm N70 price-premium points to strong demand.· Firm N70 price-premium facilitates arbitrage to move more supplies to India, incentivizes Asia refiners to produce more very-light-grade base oils..· Europe Group II N150 price holds firm vs vacuum gasoil (VGO)..· Strength of Group II price-premium contrasts with weaker price-premium to VGO for Group I light grades, which face pressure from growing surplus supply.· Firm price-premium for Group II light grades points to more balanced fundamentals for those supplies.· Any extension of trend, combined with weaker Group I price-premium, could suggest blenders are procuring more Group II supplies, compounding surplus of Group I base oils..· US Group II base oils price-premium to VGO holds firm in narrow range for domestic and export prices..· Price-premium stays in relatively narrow range since late-2024.· Rangebound price-premium contrasts with much more volatile margins in recent years.· Rangebound price-premium points to more balanced supply-demand fundamentals since late last year.· Price-premium holds in narrow range even after completion of plant-maintenance work and with seasonal slowdown in demand.· Rangebound price-premium incentivizes refiners to maintain high output levels..Asia base oils demand outlook: Week of 25 August.Asia base oils supply outlook: Week of 25 August.Base Oil News stories and analysis also available on ICIS platform
