Asia base oils supply outlook: Week of 18 August

·         Asia’s heavy-grade base oils price-premium to Singapore gasoil holds firm, especially for Group I base oils.

·         Group II heavy-grade margins stay high despite lower outright prices.

·         High margins point to supply-demand fundamentals that are sufficiently strong to incentivize refiners to maintain high output.

·         High margins coincide with still-feasible arbitrage to move shipments to India.

·         High Group II margins coincide with increasingly competitive CFR UAE Group II heavy-grade prices relative ex-tank Sharjah Group I prices.

·         Feasible arbitrage and competitive prices point to sufficient demand to absorb the supplies.

·         Asia’s light-grade price-premium to Singapore gasoil extends strong rebound.

·         Higher margins incentivize refiners to reverse any moves to produce more diesel instead of base oils.

·         Rising margins coincide with firmer Group II light-grade prices in markets like India relative to source-markets like Asia and US.

·         Firm margins and feasible arbitrage opportunities point to sufficient demand to absorb higher supplies.

·         Asia base oils margins hold firm or trend higher even after completion of most plant-maintenance work in the region.

·         Sustained strength of base oils margins suggests any subsequent pick-up in supply remains at manageable levels.

·         Persistently closed arbitrage to Americas adds to signs of supply at manageable levels.

·         Dynamic suggests buying interest in Asia and Middle East remains sufficiently strong to absorb most of the region’s supplies.

·         Any slowdown in that demand, combined with firm margins and closed arbitrage to other markets, could trigger rapid rise in surplus supplies.

·         South Korea’s base oils exports stay relatively low in July 2025, especially with plant-maintenance work completed.

·         Lower exports, despite completion of maintenance work, could reflect refiners’ comfort with stock levels and lack of urgency to boost shipments.

·         South Korea’s lower exports back up signs of Asia’s relatively balanced supply fundamentals so far in Q3 2025.

·         Singapore’s base oils exports over past four weeks extend recovery closer to more typical levels.

·         Most of recent rise in Singapore’s exports reflects surge in shipments to China.

·         Shipments to India and southeast Asia stay lower.

·         Dynamic cushions impact of rise in base oils exports from South Korea to southeast Asia in July 2025.

·         Pace of Taiwan’s base oils exports slows sharply in past two weeks after surge in shipments in early-Aug 2025.

·         Any extension of slowdown would follow sustained surge in Taiwan’s base oils exports in Jan-July 2025 from year-earlier levels to highest levels since 2019.

·         Rise in exports taps Asia’s firm Group II base oils margins so far in 2025 amid tighter supply from other key regional sources.

·         Larger share of heavy-grade shipments than light grades in Jan-July 2025 magnifies benefit of higher margins.

·         Supplies from other key sources will need to rise in coming months to cushion impact of likely drop in Taiwan’s base oils exports in Q4 2025 because of plant-maintenance work.

·         Taiwan’s plant-maintenance work could cushion impact of any rise in supplies from several new units that are expected to start up in the region in the coming months.

·         Taiwan’s diversification of exports to growing number of outlets could then cushion impact of expected rise in regional supplies.

·         Shipments to Middle East, Pakistan and Bangladesh account for 14% of Taiwan’s base oils exports in Jan-July 2025.

·         Share rises from 10% in 2024 and from 3% in 2023.

·         Pick-up in exports to those markets follows rise in flows to southeast Asia and India in recent years and drop in shipments to China.

·         Dynamic leaves Taiwan with growing number of outlets for its supplies.

·         India’s imports rise to fourteen-month high in July 2025.

·         Rise in shipments to India helps to absorb large portion of any pick-up in surplus supplies in Asia.

·         Rise in shipments to India and more manageable supplies in Asia curb need to target more distant markets with surplus supplies.

·         Open arbitrage from Asia to India, and closed arbitrage from Asia to Americas, reflects that dynamic.

·         India’s imports in July 2025 include unusually large volume of Group I brightstock from US.

·         Rise in shipments follows steady weakening of US brightstock export price vs CFR India price to widest discount in more than five years.

·         US brightstock price-discount widens further so far in Q3 2025, facilitating additional arbitrage shipments to India.

·         Arbitrage flows from US help to cushion impact of pause in brightstock shipments from Thailand to India in recent months.

·         Brightstock supply from Thailand set to improve in coming weeks following restart of Group I unit after plant-maintenance work.

·         Any rise in supply, and pick-up in flows to India, could curb attraction of lining up more brightstock shipments from US to India.

·         Any rise in Group I shipments from Thailand would add to signs of more plentiful supply in Singapore in recent weeks.

·         Singapore’s Group I base oils imports already rise over last four weeks to highest level in more than four months.