· Asia’s base oils prices hold firm versus regional gasoil prices.· Sustained strength of base oils margins suggests supply-demand fundamentals remain balanced to tight..· Balanced-to-tight fundamentals at end-Q3 would follow signs of smaller-than-usual build-up of surplus supplies in early-Q3.· Asia’s surplus of base oils supply over demand rises in July 2025 from previous month..· Size of rise in surplus supply remains relatively small and much smaller than year-earlier levels.· Including China, Asia’s shortfall of supply versus demand extends into July 2025..· Persistent shortfall coincides with unusually firm FOB Asia Group II base oils prices relative to outlets like Americas..· Firm base oils margins and closed arbitrage to outlets like Americas could speed up rise in surplus supplies if output rises sharply or demand falls.· Such a scenario could materialize in coming months when new production capacity in Asia begins operations and if planned plant-maintenance schedule is lighter than expected.· Opposite scenario has instead taken place in recent months, with Asia’s base oils supply continuing to shrink this year..· Shrinking supply and persistent shortfall points to need for additional supply.· Start-up of new production capacity likely to exceed requirements for additional supply.· Even so, ongoing supply-shortfall in Asia could cushion immediate impact of start-up of new production capacity..· Singapore’s base oils exports extend rebound over past week, boosting total shipments over past four weeks to highest level in two months..· Rise in shipments coincides with expected start-up of new production capacity in island-state during Q3 2025.· Singapore’s base oils supply gets further boost from arrival of large shipment from US..· Shipment is first in almost two months and largest since April 2025.· Shipment adds to arrival of several cargoes from Europe in recent weeks.· Shipments help to limit supply-build in US and Europe during summer months, when demand faced seasonal slowdown.· Shipments likely to slow down once new production-capacity in Singapore is up and running..· Taiwan’s base oils exports stay high in H1 Sept 2025.· Firm export volumes follow steady flows to key outlets for term supplies in Aug 2025.· Steady flows to term buyers in Aug 2025 contrast with slump in shipments to key outlets for spot shipments such as Middle East..· Signs of firm demand in southeast Asia and India likely to support steady requirements for term shipments to those markets at least in Sept 2025.· Signs of more muted demand for Group II supplies in Middle East could put pressure on spot shipments from Taiwan to target other outlets instead such as Europe.· Taiwan’s base oils exports in Aug 2025 include arbitrage shipment to Europe, consisting mostly of Group II heavy grades.· Shipment takes advantage of wide spread between Asia and Europe Group II heavy-grade prices during Q3 2025..· Price-spread stays wide in H1 Sept 2025 but starts to narrow from H2 Aug 2025.· Any further narrowing of price-spread could complicate moves to line up additional Group II shipments from Asia to Europe..Taiwan’s August base oils exports slip.Asia’s July lube demand rises.Asia base oils demand outlook: Week of 15 September.Base Oil News stories and analysis also available on ICIS platform
