Asia base oils supply outlook: Week of 25 August

·         Asia’s base oils price-premium to Singapore gasoil holds firm at levels that incentivize refiners to maintain or raise output.

·         Firm margins point to still-tight supply-demand fundamentals.

·         Margins hold firm even with prospect of rise in surplus base oils supply in Asia in Q3 2025 in response to pick-up in output and slowdown in demand.

·         Surge in shipments to markets like Middle East removes portion of surplus from Asia, limiting regional supply-build.

·         Any subsequent build-up of surplus supply could be more manageable if regional demand revives after summer lull.

·         Signs of pick-up in surplus supplies in Asia, Europe, Middle East and US could instead prompt buyers to hold back in anticipation of lower prices.

·         Any such moves could compound additional pick-up in supplies.

·         CFR India base oils price-premium to FOB Asia cargo price narrows simultaneously for Group I and Group II heavy grades.

·         Last time that CFR Group I and Group II heavy-grade premium to FOB Asia price fell simultaneously was in early-April 2025.

·         Simultaneous drop in CFR India price-premium coincides with improving availability of Group I and Group II heavy grades.

·         Improving availability of both grades curbs buyers’ need to procure additional supplies of one grade to supplement tighter availability of other grade.

·         Improving availability curbs urgency to lock in supplies.

·         Asia’ supply could face further upward pressure amid lighter round of plant-maintenance in Sept-Oct 2025.

·         Any postponement of planned plant-maintenance work in Asia later in 2025 would add further to supplies.

·         Any shipments from new production capacity in Asia would add even more additional supplies.

·         Taiwan’s base oils cargo flows see strong pick-up in activity in past week after pause since early-Aug 2025.

·         Exports still show signs of staying lower in Aug 2025 than in recent months. 

·         Singapore’s base oils exports show signs of reverting to more typical levels in Aug 2025.

·         Singapore’s base oils exports may need to rely more on supplies from domestic rather than overseas sources to maintain steady flows following sharp dip in imports in recent weeks.

·         Slowdown includes pause in recent recovery in imports from Europe and US.

·         Singapore’s requirements for supplies from those markets could ease in coming months as new production capacity begins to ramp up.

·         China’s Group II base oils supply rises in July 2025 from year earlier, contrasting with drop in Group I and Group III supply.

·         Group II supply gets further boost from China’s weak Group III price relative to Group II, incentivizing Group III refiners to produce more Group II base oils instead.

·         Drop in China’s Group III base oils output leaves country more reliant on imports to cover its requirements.

·         Group III imports’ share of China’s Group III supply duly rebounds in 2025 after slumping in H2 2024.

·         Dynamic highlights ongoing opportunities in China for some overseas base oils grades.

·         Dynamic also highlights short-term nature of some of those opportunities and need for flexibility and speed to tap them.

·         India’s base oils supply from key sources in Asia shows signs of tightening so far in Q3 2025.

·         South Korea’s base oils exports to India fall to ten-month low in July 2025.

·         Drop in exports in July 2025 adds to slowdown in shipments to India from other key Asia suppliers like Taiwan and Singapore.

·         Exports to India from key Asia producers duly falls to ten-month low in July 2025.

·         Slowdown in shipments raises prosect of drop in India’s imports in Aug 2025.

·         Any slowdown in imports would follow and partially balance out surge in India’s base oils imports in July 2025.

·         Slowdown in Singapore’s shipments to India in July 2025 shows signs of partially reversing in Aug 2025.

·         Singapore’s base oils exports to India over past four weeks recover to highest in more than a month.

·         India also set to take delivery of more shipments from other sources like Europe and Saudi Arabia in Aug 2025, cushioning slowdown in shipments from Asia.

·         Any dip in India’s imports in Aug 2025 could curb size of build-up of surplus supplies ahead of seasonal rise in demand from end-Q3.

·         Asia’s base oils exports to Middle East rise to ten-month high in July 2025, clearing surplus volumes from regional market.

·         Rise in shipments likely to further boost Asia’s share of global exports to Middle East, after share dips in first four months of 2025 from year-earlier levels.

·         Asia’s share of global exports to Middle East could rise further following expected ramp-up of new production capacity in Asia in coming weeks.

·         Any such trend could squeeze further the share of supplies originating from US and Europe.