Asia base oils supply outlook: Week of 11 August

·         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.