· Asia’s base oils prices extend rise vs feedstock/gasoil prices.· Sustained strength of base oils margins points to limited surplus supply even as firm prices incentivize refiners to boost output.· Limited surplus supply at end-Q1/early-Q2 2025 follows seasonal rise in demand and heavy round of plant maintenance.· Limited surplus supply in mid-Q2 2025 likely reflects impact of ongoing plant maintenance and stock-replenishment following completion of some maintenance work.· Supply-tightness likely to ease at end-Q2 2025 as more plant maintenance draws to close, and with prospect of larger-than-expected slowdown in regional demand.· Group I base oils supply could stay tighter for longer amid ongoing/upcoming plant maintenance in Middle East and southeast Asia.· Arbitrage to move supplies from Asia to markets like Latin America improves for light grades, stays hard to work for heavy grades..· A pick-up in surplus supplies, combined with weaker regional demand, could require more feasible arbitrage opportunities to limit any supply-build..· Taiwan’s base oils exports show signs of holding firm in April 2025 even after sharp slowdown in shipments in H2 April 2025.· Exports show signs of rebounding in early-May 2025.· Singapore’s base oils exports from domestic sources fall in four weeks to end-April 2025 from month-earlier levels to lowest monthly level since end-2022..· Drop in exports contrasts with surge in shipments in Feb-March 2025 that help cushion impact of lower volumes from South Korea.· More recent drop in shipments to lower-than-usual levels magnifies impact of lower supplies from South Korea.· Singapore takes delivery of cargo from Netherlands in past week.· Shipment is first from Europe in more than a month.· Even with latest cargo, slowdown in imports from Europe in April 2025 contrasts with wave of shipments from Europe in four months to March 2025..· Rise in shipments from Europe in early-2025 helps to cushion against impact of lower supplies from South Korea.· Drop in shipments curbs that support..· South Korea’s base oils output falls to twenty-one month low in March 2025..· Output falls mostly because of scheduled plant maintenance work that ends in H2 April 2025.· Lower output triggers supply shortfall in March 2025 for fifth time in six months, by largest volume in more than five years..· South Korean refiners likely to need longer to replenish depleted stocks in response to large and sustained supply shortfall.· Expected rise in surplus supply in Q2 2025 could take longer to appear as refiners first replenish depleted stocks.· Avoidance of supply surplus for longer could curb pressure on refiners to adjust prices.· Higher margins for longer, and weaker demand, could also speed up round of stock replenishment..· Japan’s base oils output recovers to five-month high in March 2025..· Higher output and lower demand free up more supplies for export.· Japan's base oils exports rebound in March 2025 to nineteen-month high..· Rebound in exports, partly because of lower domestic demand, reflects another indirect repercussion of US tariffs.· A more widespread repeat of this scenario, of lower demand freeing up more supplies for export, could trigger unexpected pick-up in supplies in Asia market.· Rebound in Japan’s base oils exports in March 2025 has muted benefit for southeast Asia, with most of the shipments moving to South Korea..· Asia’s imports of premium-grade base oils from Middle East stay unusually high in March 2025 for second time in last three months. · Pick-up in shipments lifts total imports from Middle East in last three months to second-highest level since early-2024..· Pick-up in shipments to Asia coincides with peak-demand period in that region.· Pick-up in shipments to Asia coincides with and cushions impact of heavy round of plant maintenance in the region in Q1 2025.· Pick-up in shipments likely helps to ease any impact of maintenance work on light-grade supply especially.· Pick-up in shipments to Asia likely to be temporary.· Pick-up in shipments coincides with rise in China’s Group III base oils output, precedes likely slowdown in Asia’s lube demand in coming months..Japan’s March base oils demand falls.S Korea’s March base oils output falls.Asia base oils demand outlook: Week of 5 May.Asia’s Group III imports from Middle East rise in March
