· Asia’s base oils price-premium to competing/feedstock prices extends fall to five-month low.· Lower margins coincide with improving supply in Asia as more plant-maintenance draws to a close.· Improving supply and seasonal slowdown in demand could curb refiners’ leverage to target higher prices to reverse recent drop in margins.· Improving supply, seasonal slowdown in demand and lower margins instead boost incentive for refiners to adjust output.· Such a move would help to sustain more balanced fundamentals.· Increasingly narrow price-premium to diesel for light grades especially could trigger such an adjustment in output.· Margins for heavy grades remain high, curbing pressure to adjust output of those grades.· Group I heavy-neutrals supply could tighten because of upcoming plant-maintenance in southeast Asia and any extended slowdown in exports from Iran.· Ex-tank UAE Group I SN 500 price-premium to FOB Asia cargo price rises to widest level in more than a year, reflecting concern about that dynamic..· Any extension of trend would make arbitrage shipments to Middle East more feasible.· Any sustained strength in Group I prices would boost attraction of using more Group II heavy grades instead.· Scenario could prolong already-extended price-strength of Group II heavy-grade base oils..· Taiwan’s base oils exports see slowdown over past week, raising prospect of its total shipments this month falling from May 2025.· Singapore’s base oils exports over last four weeks hold steady, close to more typical levels..· Exports get support from sustained pick-up in re-exports of supplies that originated from other markets..· Exports from other markets could face slowdown amid sustained drop in shipments from US and Europe over past two months..· Singapore could see revival in delivery of shipments from US and Europe in coming weeks following completion of most plant maintenance work in those markets and pick-up in their exports to Singapore..· South Korea’s base oils exports stay low in May 2025 for fifth time in six months..· Persistently-low exports keep supply fundamentals in Asia more balanced for longer.· Low exports earlier this year likely had larger impact on Group II supplies.· Dynamic likely had larger impact on markets like southeast Asia and Middle East.· South Korea’s low exports in May 2025 likely had larger impact on Group III supplies, reflecting impact of maintenance work on Group III unit that month.· Dynamic likely to have larger impact on more distant markets like US.· Sustained fall in South Korea’s base oils exports to southeast Asia contrasts with rise in shipments from Singapore to southeast Asia in first five months of 2025..· Trend leaves shipments from Singapore accounting for growing share of supplies in southeast Asia, while South Korea's share dwindles.· Trend could gather pace over coming months following expected start-up of new production capacity in Singapore.· Extension of trend could put pressure on South Korea's refiners to adjust prices to boost competitiveness of their supplies, or to target other markets instead..· Base oils exports to southeast Asia from South Korea, Singapore and Taiwan combined hold close to ten-month high in May 2025..· Firm exports likely keep blenders’ inventories at healthy levels.· Blenders’ healthy stocks could curb any urgency to seek additional volumes if supply were to face unexpected disruptions..S Korea May base oils exports to US fall.Asia base oils demand outlook: Week of 23 June
