Asia base oils supply outlook: Week of 26 May

·         Asia’s heavy-grade base oils prices stay high relative to feedstock/gasoil prices.

·         Firm margins point to ongoing supply-tightness even with completion of most plant maintenance work.

·         Firm margins suggest supply-tightness continues to outweigh signs of more muted demand, incentivizing refiners to boost output of heavy grades.

·         Any disconnect between prices and supply fundamentals could trigger faster rise in surplus volumes.

·         Asia’s light-grade prices stay relatively firm in narrower range vs feedstock/gasoil prices.

·         Rangebound margins curb incentive for refiners to adjust output.

·         Refiners could instead seek to move surplus supplies to outlets like Middle East and Americas.

·         Premium of CFR UAE Group II N150 over FOB Asia cargo price holds steady after narrowing earlier this month.

·         Any further fall in light-grade prices in markets like Middle East would put pressure on Asia refiners to adjust prices to make the arbitrage feasible.

·         Any such price adjustments could put further pressure on margins.

·         Taiwan’s base oils exports show signs of staying at elevated level in May 2025, extending period of high export volumes since Feb 2025.

·         Light and heavy-grade base oils account for similar share of Taiwan’s Group II shipments so far in May 2025.

·         Singapore’s base oils exports stay higher over last four weeks amid sustained rise in shipments of supplies originating from other markets.

·         Dynamic contrasts with March 2025 when surge in shipments from domestic sources supported high export volumes.

·         Higher export volumes from other markets could continue for longer following arrival in past week of large shipment from the Netherlands.

·         Singapore’s base oils imports from suppliers of Group I base oils extend fall over last four weeks to close to lowest since H1 2024.

·         Dip in shipments coincides with Group I plant maintenance in Thailand in May 2025.

·         South Korea’s base oils exports to India stay higher than usual in April 2025 for third month.

·         High shipments lift total three-month export volume to highest in a year and second-highest since end-2021.

·         High shipments help to cover for round of stock-replenishment and plant maintenance work in India in April-May 2025.

·         South Korea’s Group II base oils supply likely rises during Q2 2025 following completion of plant maintenance work in April 2025.

·         Higher supply could increase importance of exports to India staying high to avoid build-up of surplus supplies.

·         Exports to India could instead face pressure to fall following completion of plant maintenance work in India and ahead of seasonal slowdown in demand.

·         Any such slowdown would put pressure on supplies from South Korea to target other markets instead.

·         Base oils exports from Asia’s key suppliers fall to three-month low in April 2025.

·         Asia's three-month average export volume continues to trend up in April 2025 to highest in almost two years.

·         Rising three-month-average volume reflects higher-than-usual exports in Feb-March 2025.

·         Rising three-month-average volume, combined with weaker-than-expected lube demand from end-Q1 2025, curbs urgency for buyers to procure replenishment supplies.

·         Base oils exports from Asia’s key suppliers to southeast Asia hold firm in April 2025 and well above year-earlier levels.

·         Firm export volumes, combined with weaker-than-expected demand, could leave regional blenders with healthy inventory levels.