· Asia’s heavy-grade base oils price-premium to Singapore gasoil holds firm in narrow range, even if down from highs in Q2 2025.· Firm premium sustains incentive for refiners to maintain high output of heavy grades even amid signs of rise in surplus supply.· FOB Asia Group II heavy-grade price discount to CFR UAE prices rises to highest in more than a year..· FOB Asia Group II heavy-grade price maintains steady premium to FOB US export prices.· Dynamic points to sufficient surplus supply to facilitate arbitrage shipments to Middle East, but insufficient supply to need to move cargoes to more distant outlets like Americas.· Dynamic points to sufficient regional demand to absorb surplus volumes.· Asia’s light-grade base oils price-premium to Singapore gasoil rises to highest in more than two months.· Increasingly firm price-premium curbs incentive for refiners to cut output of light grades.· Increasingly firm price-premium coincides with more feasible arbitrage to markets like India, and less feasible arbitrage to markets like Americas..· Dynamic points to limited surplus supply, and healthy regional demand, curbing need to target more distant markets with additional volumes..· Firm heavy-grade margins and upward pressure on light-grade margins point to balanced-to-tight supply fundamentals even after completion of most plant-maintenance work.· Balanced-to-tight fundamentals follow unusually low surplus of Asia’s base oils supply over region’s lube demand in June 2025 and in Q2 2025..· Including China’s net imports, Asia’s base oils supply lags demand in Q1-Q2 2025..· Tighter-than-usual supply curbs needs for refiners to make sharp price-adjustments to clear surplus volumes at start of Q3 2025.· Smaller surplus and firmer demand leave blenders with lower stocks at start of Q3 2025, triggering firmer-than-usual requirements even during seasonal slowdown..· Taiwan’s base oils exports hold firm so far in Aug 2025 even after slowdown in shipments in past week.· Singapore’s weekly base oils exports rise in first week of August to highest level in more than a month.· Any extension of rise in shipments would support further recovery in Singapore’s monthly exports to more typical levels..· Exports could get more sustained support following recent and ongoing rebound in island-state’s base oils imports..· Rise in imports include additional shipments from Europe.· Requirements for those additional shipments could start to dwindle following expected ramp-up of new production-capacity in Singapore in coming weeks..· China’s base oils output stays low in July 2025 even after completion of most plant-maintenance work..· Low output coincides with unattractive arbitrage, curbing incentive for overseas refiners to boost shipments to China.· Low supply in July 2025 could limit any build-up of surplus volumes at time of year when demand is seasonally lower.· Low supply could trigger stronger rise in demand in months of August and September as blenders prepare for seasonal pick-up in lube consumption.· Low supply and any rise in demand could support recovery in domestic base oils margins and arbitrage opportunities..· China’s domestic base oils margins duly rise in H1 Aug 2025. · China’s Group III base oils output falls to fourteen-month low in July 2025..· Fall in output and lower imports of premium-grade base oils fail to trigger recovery in China’s weak domestic Group III base oils prices.· Weak prices raise prospect of Group III output staying at lower levels..· Thailand’s net Group I base oils supply stays higher than usual in June 2025..· Higher supply in Q2 2025 leaves country well-positioned to cover requirements during plant-shutdown in Q3 2025.· Offer of Group I spot supplies of Thai origin for loading in late-Aug 2025 points to such a dynamic, with supply more than sufficient to cover requirements during plant-shutdown.· Thailand’s total base oils supply lags demand in June 2025 even with firm Group I supply..· Supply-shortfall instead reflects drop in imports of premium-grade base oils, especially from South Korea.· Regional refiners should have little difficulty reversing supply-shortfall following completion of Group III plant-maintenance work in northeast Asia and Middle East..Asia base oils demand outlook: Week of 11 August.China’s July base oils output stays low.Asia’s June lube demand recovers.Thailand’s June Group I base oils supply holds firm.Base Oil News stories and analysis also available on ICIS platform
