· Asia’s Group II heavy-grade base oils price-premium to gasoil holds steady at lower level, close to levels in Q4 2024.· Lower heavy-grade base oils margins and falling regional cargo price point to weaker supply-demand fundamentals.· Even at lower level, price-premium remains at level that incentivizes refiners to maintain steady output of the product.· Asia Group II heavy-grade prices also maintain steep premium to prices in more distant markets like Americas..· Relative price-strength of heavy grades and persistence of that price-strength suggest that any regional surplus remains manageable..· Asia’s light-grade base oils price-premium to gasoil holds in narrow range, staying lower than in Q2 2025 and in Q3 2024 but higher than in Q3 2023..· Lower light-grade price-premium could curb incentive for refiners to raise output.· Price-premium holds at level that is unlikely to incentivize refiners to cut output.· Higher outright prices and concern about tight supply incentivize refiners to hold back.· Same factors incentivize buyers to lock in supplies, adding to any subsequent tightness..· Asia’s base oils supply could face smaller-than-usual build-up of surplus volumes in Q3 2025 even with completion of most plant-maintenance work.· Supply could be more balanced amid signs that buyers and refiners entered Q3 2025 with tighter-than-usual stocks.· Tighter-than-usual stocks could spur steadier consumption, cushioning impact of seasonal slowdown in demand.· Open arbitrage to more regular outlets like India and Middle East could point to steady buying interest in those markets.· Closed arbitrage to less regular outlets like Americas could point to insufficient supply to require removal of surplus volumes in those markets..· South Korea’s base oils supply shows signs of being tighter than usual at start of Q3 2025.· Lower output and rising domestic and overseas demand trigger jump in South Korea's supply-shortfall in June 2025 to second-highest level in eight months..· Tighter supply likely impacts Group III base oils because of plant-maintenance in June 2025.· Tighter supply likely also impacts Group II base oils, which likely account for most of rebound in South Korea's exports in June 2025.· Supply could be tighter than expected at start of Q3 2025 if rebound in South Korea’s domestic demand in June 2025 exceeded expectations.· Tighter supply could cushion impact of seasonal slowdown in regional demand in Q3 2025..· Japan’s base oils supply also lags demand in June 2025, triggering drop in stocks to lowest in more than a decade..· Lower-than-usual supply contrasts with higher-than-usual domestic demand, mirroring similar dynamic in South Korea.· Tighter supply cuts volumes available for export, squeezing availability of Group I base oils for overseas markets..· Drop in exports coincides with dip in Group I shipments from Middle East in June-July 2025, and Group I plant-maintenance in Thailand in July 2025..· Singapore’s base oils exports show signs of falling sharply in July 2025 from previous month, adding to signs of tighter-than-expected supply in Asia-Pacific region..· Taiwan’s base oils exports hold firm in July 2025 even with slowdown in shipments in second half of the month.· Saudi Arabia’s base oils cargo exports show signs of slipping in July 2025 from previous month..· Asia’s premium-grade base oils imports from Middle East fall to four-month low in June 2025..· Imports fall amid slump in shipments from Qatar that coincides with maintenance-work at base oils units in Bahrain and UAE in Q2 2025.· Drop in imports could add to Asia’s tighter-than-expected supply at start of Q3 2025..S Korea’s June base oils output falls.Japan’s June base oils supply lags demand.Asia base oils demand outlook: Week of 4 August
