· Asia’s base oils prices resume rise versus feedstock/gasoil prices.· Rising margins point to still-firm supply-demand fundamentals at start of Q2 2025.· That dynamic could change in coming weeks if economic growth slows, compounding typical seasonal dip in demand from end of second quarter.· Any such slowdown in demand would coincide with base oils margins that got boost from lower crude oil prices rather than stronger fundamentals.· Firm base oils margins incentivize refiners to maintain or raise output.· Dynamic could magnify any subsequent imbalance between supply and demand.· Asia’s base oils supply could face limited direct disruption from new US tariffs, with base oils among the products exempted from the tariffs.· Exemption of base oils imports from US tariffs reduces pressure on Asia’s base oils suppliers to adjust pricing or trade flows accordingly.· Asia’s base oils shipments to US could instead face indirect impact of tariffs because of expected slowdown in global economic activity..· Taiwan’s base oils shipment volumes recover in early April 2025 after sharp slowdown in March 2025.· Light-grade and heavy-grade supplies account for similar share of shipments since mid-March 2025.· Singapore’s base oils exports over last four weeks fall back to more typical levels, following surge in shipments during previous two months..· Slowdown in shipments from Singapore over last four weeks and from Taiwan in March 2025 coincide with widespread round of plant maintenance in Asia.· A reversion of shipments from Singapore and Taiwan to more typical levels at start of Q2 2025 could cushion impact of any slowdown in regional demand..· Ongoing flow of shipments from US and Europe to southeast Asia partially balances out tighter supply from other refiners in Asia-Pacific region.· Any slowdown in Asia’s demand could curb requirements for those supplies.· Singapore takes delivery of another large cargo from US in past week..· Shipment boosts Singapore’s imports from US to highest four-week volume in more than three years.· Shipments extend surge in cargoes from US to Singapore since mid-2024..· Japan’s base oils output falls in Feb 2025 to second-lowest level in more than three years..· Base oils output likely to stay at lower levels because of scheduled plant maintenance throughout the year.· Lower output compounds Asia’s tight availability of Group I base oils.· Japan’s lower demand in Feb 2025 cushions impact of lower output.· Any pick-up in demand would magnify impact of lower output.· Any slowdown in Asia’s economic activity could instead cushion impact of tighter supply..· Base oils exports to southeast Asia from Japan, Thailand, Indonesia, and China fall to six-month low in Feb 2025..· Fall in exports from key sources of Group I base oils complicates southeast Asia blenders’ stock-building plans ahead of seasonal rise in demand in month of March.· Dynamic likely leaves blenders with squeezed stocks at start of Q2 2025.· Dynamic highlights importance of additional Group I shipments from Europe and Middle East to supplement’ Asia’s supply.· Additional scheduled Group I plant maintenance in Asia over coming months adds to importance of additional shipments to supplement Asia’s supply.· Exports from key sources of Group I base oils in Feb 2025 stay higher than year-earlier levels.· Those exports, combined with Singapore’s Group I imports, leave supply even higher still..· Asia’s Group I heavy-grade prices stay unusually high vs Singapore gasoil prices so far in 2025.· Firm margins suggest supply-demand fundamentals stay tight even with higher supply.· Dynamic suggests any change in strength of demand could have larger-than usual impact..· Thailand’s base oils output recovers in Feb 2025..· Thailand’s base oils supply still lags demand in Feb 2025 for second month..· Supply shortfall likely cuts Thailand’s base oils stocks ahead of seasonal pick-up in demand in March 2025, followed by plant maintenance work in Q2 and Q3 2025.· Any extension of firm domestic demand in recent months, combined with plant maintenance, would likely keep stocks lower over coming months and curb surplus volumes for overseas markets.· Any slowdown in domestic lube demand could by contrast curb any supply tightness.· Recent market volatility increases feasibility of that scenario..Thailand’s Feb base oils output rises.Japan’s February base oils output falls.Asia base oils demand outlook: Week of 7 April
