Asia base oils supply outlook: Week of 22 September

·         Asia’s Group II base oils prices stay firm relative to feedstock and gasoil prices.

·         Firm margins point to still-balanced-to-tight fundamentals, sustaining incentive for refiners to maintain high output.

·         Margins hold firm despite scant scheduled plant-maintenance work and expected start-up of new production and shipments in coming weeks.

·         Firm margins could magnify impact of any such rise in production capacity unless demand holds firm.

·         Firm margins through Q3 2025 reflect signs of Asia’s more muted rise in surplus supplies extending through the quarter.

·         Some signs of pick-up in supplies in recent weeks could trigger rise in surplus volumes in Q4 2025 unless demand holds firm or output falls.

·         Any such rise in surplus supply could put pressure on prices to respond to incentivize lower output or to facilitate arbitrage shipments to other markets.

·         Arbitrage to move supplies to other markets instead gets more complicated for Group II light grades especially.

·         Asia Group II light-grade discount to US export prices holds at narrowest level in more than a year.

·         Asia Group II light-grade price-discount to domestic Europe prices stays wide, but holds in narrow range in recent weeks and down from peak levels in early Q3 2025.

·         Asia Group II light-grades could face growing pressure from US supplies, whose price-discount to Europe prices widens more sharply during Q3 2025 to levels that are similar to Asia price-discount to Europe prices.

·         Any pressure from surplus supply in Asia stays more manageable so far in Q3 2025 amid dip in shipments from some of Asia’s key producers.

·         South Korea’s base oils exports fall to three-month low in Aug 2025.

·         Exports fall despite completion of plant-maintenance work at end-Q2 2025.

·         Lower exports coincide with drop in shipments from Taiwan in Aug 2025 from previous month.

·         Singapore’s exports from domestic refiners also stay lower than usual in Aug 2025.

·         Lower exports from Asia’s key suppliers cushion impact of seasonal slowdown in regional demand in Q3 2025.

·         South Korea’s base oils shipments to India rise in Aug 2025 even as total exports fall, trimming further size of any surplus volumes.

·         Asia’s Group II base oils prices hold steady relative to markets like India and Middle East and firm relative to US export prices so far in Q3 2025.

·         Firm prices and closed arbitrage to Americas point to lack of build-up of surplus volumes or pressure to clear the volumes.

·         Slump in South Korea’s base oils exports to Latin America in 2025 reflects that dynamic.

·         Asia’s base oils exports could be hard to sustain at lower levels if base oils output holds firm, refiners’ and blenders’ stocks are replenished, and as new production capacity comes online.

·         Additional production capacity includes new unit in Singapore.

·         Singapore’s exports from domestic plants over past four weeks extend strong rebound to highest since start of Q3 2025.

·         Exports in past week include largest cargo to US in more than two years.

·         Exports in past week include largest shipment to UAE in more than six years.

·         Pick-up in Singapore’s base oils exports to UAE in recent months consists of re-exported supplies that originate from other markets.

·         Exports in past week include supplies from domestic sources.

·         Unusual change in Singapore’s trade flows could point to recent change in production dynamics.

·         Singapore’s own supplies also get boost from arrival in past week of additional supplies from US, as well as from Russia.

·         Shipment from US lifts Singapore's total imports from the country to highest four-week total since H1 April 2025.

·         Imports help to remove supplies from US domestic market, slowing build-up of surplus volumes.

·         Imports from US likely to slow down once new production capacity in Singapore is up and running.

·         Slowdown in imports would force US supplies to target other outlets instead.

·         Taiwan’s base oils exports hold firm so far in Sept 2025.

·         High volumes extend period of persistently-high exports from Taiwan so far this year.