Asia base oils supply outlook: Week of 14 April

·         Asia’s base oils prices surge relative to feedstock and gasoil prices.

·         Surge in margins include light-grade base oils, for which supply is more readily available.

·         Increasingly high margins and closed arbitrage to other markets by contrast points to tight supply.

·         Asia’s base oils supply likely to stay tighter than usual early in Q2 2025, especially for Group I base oils, amid ongoing and additional plant maintenance work.

·         Even so, supply-demand tightness likely peaked in Q1 2025, especially in month of March, with availability gradually improving during Q2 2025.

·         Easing supply tightness would coincide with likely seasonal slowdown in demand from end-Q2 2025.

·         Any slowdown in demand that is steeper than expected would speed up pick-up in surplus supply.

·         Still-closed arbitrage to markets like Americas would further speed up recovery in supply.

·         Taiwan’s base oils exports stay high so far in April 2025, with heavy grades accounting for more than half the volume.

·         Singapore’s weekly base oils exports stay lower, extending drop in shipments over last four weeks to lowest level in almost two months.

·         Any extended slowdown in shipments would cushion impact of expected pick-up in supplies from South Korea in coming weeks following completion of plant maintenance work.

·         China’s base oils supply rises to five-month high in March 2025.

·         Rising supply covers for seasonal rise in demand, facilitates moves to boost stocks ahead of round of domestic plant maintenance work at end-Q1 2025 and during Q2 2025.

·         Premium-grade base oils account for more than 85% of China’s paraffinic base oils output in March 2025.

·         Rising premium-grade base oils share cushions impact of planned or unexpected supply-disruptions.

·         Dwindling Group I base oils share of output conversely magnifies impact of any change in Group I supply.

·         US base oils/lube exports to India rise to twenty-month high in Feb 2025.

·         Shipments likely to reach India at start of Q2 2025.

·         Shipments would help to cover for drop in domestic and regional supply because of plant maintenance work.

·         Shipments would help to replenish blenders’ depleted stocks at start of Q2 2025, curbing urgency to seek additional volumes.

·         Shipment of additional arbitrage cargoes from US to India could face complications from expected recovery in supply in Asia, as well as recent market volatility.

·         India’s base oils supply already shows signs of getting boost from strong rise in imports in March 2025, including wave of shipments from Middle East.

·         High import volumes would limit size of Indian blenders’ supply-shortfall in March 2025, curbing their urgency to replenish stocks at start of Q2 2025.