· Asia base oils prices slide relative to crude and gasoil prices, triggering fall in margins. · Size and speed of drop in base oils premium to crude/gasoil complicates production and procurement plans.· Any signs of crude oil prices holding at more elevated levels for longer, and base oils margins at lower levels for longer, could put pressure on refiners to cut output.· Firmer margins had until now deterred such moves.· Without run-cuts, Asia’s base oils supply likely to improve over coming weeks as more plant maintenance draws to a close.· Prospect of weaker base oils demand would magnify rise in surplus supply.· Same dynamic already materializes in April 2025 as slump in demand outweighs still-low supply..· Extension of that trend over coming months would put pressure on refiners to trim output or to adjust prices to make arbitrage more feasible to outlets like Americas, Middle East and Europe.· A sustained slump in base oils margins could facilitate moves to trim output..· Singapore’s base oils exports hold in more typical range over last four weeks..· Shipments get support from higher-than-usual volume of re-exported supplies..· Singapore’s four-week base oils imports extend slowdown since H1 April 2025..· Drop in imports raises prospect of curbing volumes available for re-export.· Dynamic would put pressure on shipments from domestic refiners to rise to sustain steady exports.· Alternative would be recovery in imports or fall in exports.· US base oils exports to Singapore recover in April 2025..· Pick-up in shipments raises prospect of arrival of more replenishment supplies from US in coming weeks..· Taiwan’s Group II base oils exports hold at elevated levels in H1 June 2025, with heavy grades accounting for about half the volume.· Firm shipment volumes follow high exports in May 2025, with shipments to China accounting for smallest share of exports in seven months..· Shipments to China stay low despite the country’s lower output in May 2025 because of plant-maintenance.· Taiwan’s exports to UAE by contrast rise to six-month high in May 2025..· Dynamic suggests arbitrage to more distant markets like Middle East is more attractive than to China.· Rise in shipments to Middle East in May 2025 points to pick-up in surplus volumes in Asia even with ongoing plant-maintenance work throughout the region. .· China’s base oils output likely to recover in June 2025 after falling to three-month low in May 2025..· Lower output coincides with heavy round of plant-maintenance work.· Output likely to get boost following completion of most of the maintenance work by end-May 2025, and restart of unit that was offline since last year.· China’s Group III base oils output could stay lower for longer because of plant run-cuts from late-May 2025.· China’s Group III 4cSt price premium to Group II N150 also stays unusually weak, incentivizing refiners to extend those run-cuts and to produce Group II instead of Group III..· China’s Group III base oils output extends fall to one-year low in May 2025, reflecting impact of those moves to produce more Group II base oils..· Thailand’s base oils output rises to five-month high in April 2025..· Higher output contrasts with lower domestic/overseas demand.· Thailand’s output less demand duly rises to highest level this year and third-highest level in last thirty-two months..· Rise in surplus Group I supply likely cushions impact of plant maintenance in Thailand in May 2025.· Rise in surplus Group I supply coincides with pick-up in availability of spot shipments in southeast Asia in recent weeks.· Dynamic suggests Asia’s Group I supply-tightness has passed its peak..· Global supply likely falls in early-Q2 2025 because of heavy round of plant-maintenance work in all the key markets.· Lower supply would follow rebound in volumes in March 2025, which follows slump in global supply to two year-low in Feb 2025..· Base oils supply in Asia, Europe and Americas still falls in Q1 2025 from Q4 2024 amid simultaneous dip in volumes in all those markets..· Dip in supply in Q1 2025 curbs supply-build during winter months and ahead of seasonal rise in demand in Q2 2025..Asia’s April lube demand falls.China’s May base oils output falls.Thailand’s April base oils supply exceeds demand.Asia base oils demand outlook: Week of 16 June
