Asia base oils supply outlook: Week of 28 July

·         Asia’s heavy-grade base oils prices hold at elevated levels vs Singapore gasoil, even if lower than in Q2 2025.

·         Firm heavy-grade margins sustain incentive for refiners to maintain output, even amid signs of pick-up in surplus supplies.

·         Asia’s Group II heavy-grade prices hold at levels that keep open arbitrage from US and keep shut arbitrage to Americas.

·         Price differentials could attract more heavy-grade supplies to Asia, adding to region’s surplus volumes.

·         Dynamic could put pressure on further adjustment in prices to deter shipment of additional supplies to Asia.

·         Relatively firm price-differentials could alternatively suggest size of any surplus volumes is manageable.

·         Asia’s Group II light-grade base oils prices hold at lower levels relative to gasoil prices.

·         Weaker price differentials and firm diesel premium to crude incentivize refiners to redirect more feedstock supplies to middle-distillates pool.

·         Arbitrage to move light-grade shipments gets harder to work to China, holds steady to markets like India and UAE.

·         Dynamic points to steady-to-muted demand, limiting sellers’ leverage to adjust prices.

·         Dynamic adds to incentive for refiners to trim output.

·         Taiwan’s base oils exports hold at elevated levels in July 2025 even with slowdown in shipments in past week.

·         Heavy-grade base oils continue to account for larger share of Taiwan’s exports in July 2025.

·         Singapore’s base oils exports likely to fall sharply in July 2025 from previous month, with shipments over last four weeks falling to five-month low.

·         Dip in shipments could cushion impact of seasonal slowdown in regional demand and prospect of pick-up in supplies from other key producers in Asia region.

·         Singapore’s Group I base oils supply gets boost from recent arrival of shipments from Russia and Saudi Arabia.

·         Singapore’s imports of Group I base oils over last four weeks duly rise to highest level in four months.

·         Pick-up in Group I supplies coincides with, helps to cushion impact of plant-maintenance work in Thailand.

·         Singapore’s base oils imports from Europe and US rise to four-month high so far in July 2025.

·         Recovery follows slump in imports in Q2 2025, but remains below unusually high volumes in H2 2024 and Q1 2025.

·         Imports from US and Europe could stay below those levels or fall further because of expected rise in Singapore’s own production capacity in coming months.

·         Dip in imports in Q2 2025 coincided with and likely partly reflected impact of plant-maintenance in US and Europe.

·         Any further dip in imports in H2 2025 would be despite relative lack of plant-maintenance work in those markets.

·         Dynamic would put pressure on more US/Europe supplies to target other markets instead. 

·         Gradual restart of base oils units in China raises prospect of rise in domestic output in Q3 2025.

·         Trend could have larger impact on overseas suppliers of premium-grade base oils.

·         China’s imports of Group II and Group III base oils account for larger-than-usual share of country’s Group II/Group III supply in June 2025.

·         Larger share coincides with and cushions impact of sharper fall in domestic Group II and Group III base oils output in June 2025.

·         Recovery in domestic output could leave imports reverting to more typical, lower share of total supply.

·         India’s base oils output edges up in June 2025 following completion of some plant-maintenance work.

·         Even with completion of additional maintenance work in H2 July 2025, India’s rangebound base oils output in recent years contrasts with steady rise in domestic lube consumption.

·         Trend triggers growing gap between domestic output and consumption.

·         Growing supply-shortfall increases India’s reliance on base oils imports.

·         Planned start-up of new base oils production capacity in India in H2 2025 would reduce that reliance on base oils imports.

·         Any delay to start-up of new production capacity would conversely increase India’s reliance on base oils imports to meet ongoing rise in consumption.

·         Saudi Arabia’s base oils exports show signs of slowing in July 2025 after rising to five-month high in June 2025.

·         Dip in shipments in July 2025 could prolong slowdown in flows of Group I base oils from Middle East to India.