Global base oils margins outlook: Week of 6 October

·         Global base oils prices recover vs feedstock/gasoil prices after crude oil prices reverse recent gains.

·         Firmer base oils price-differentials ease pressure on refiners to trim run-rates at time of year when supply often starts to outpace demand.

·         Firmer price-differentials coincide with lighter round of plant-maintenance in coming weeks vs H1 2025.

·         Firmer price-differentials coincide with recent and upcoming start-up of new base oils production-capacity in Asia.

·         Firmer base oil margins and prospect of healthy availability of supply could add to incentive for buyers to keep stocks at lower levels.

·         FOB Asia base oils price-premium to Singapore gasoil edges up.

·         Group I/II heavy-grade price-premium to gasoil stays well above typical levels even if down from recent highs.

·         Light-grade price-premium returns to range it held in for most of last two months.

·         Steady-to-high price-premiums sustain incentive for refiners to maintain high output, especially of heavy grades.

·         China’s domestic Group II N150 price-premium to Shandong diesel price recovers after dipping in H2 Sept 2025.

·         Price-premium stays well below peak-levels in H1 Sept 2025.

·         Any extension of recovery in price-premium could point to change in supply-demand fundamentals at time of year when they typically start to weaken.

·         Any resumption of fall in price-premium would add to signs of waning support from recent seasonal rise in demand.

·         CFR India Group II N70 price-premium to Singapore gasoil recovers, staying high even if still down from peak levels this year.

·         Persistently-firm N70 price-premium throughout this year points to strong demand.

·         Firm price-premium sustains incentive for Asia refiners to line up more very-light-grade base oils shipments to move to India.

·         Rise in CFR India N70 price-premium in Aug 2025 coincides with fall in India’s imports of very-light-grade base oils to six-month low that month.

·         Still-firm N70 price-premium precedes expected start-up of new production capacity in India later in Q4 2025.  

·         Europe’s Group II light-grade price-premium to vacuum gasoil (VGO) holds firm.

·         Firm Group II price-premium contrasts with domestic Group I SN 150 price-premium hovering close to lowest level in recent years.

·         Contrasting trends between Group I and Group II price-premiums since May 2025 point to diverging supply-demand fundamentals between the grades that so far show little sign of changing.

·         Even so, Group I SN 150 premium to VGO rebounded strongly in recent years each time that it fell close to current levels.

·         US Group II light-grade export price-premium to VGO extends stronger rise in recent weeks vs other grades.

·         US Group II light-grade export-price premium to VGO extends stronger rise in recent weeks vs other regions.

·         Outperformance of US Group II light-grade export prices vs other grades and regions points to tighter supply-demand fundamentals for the grade.

·         Outperformance of Group II light-grade export prices curbs incentive for refiners to adjust run-rates.