Asia base oils supply outlook: Week of 30 June

·         Asia’s base oils prices recover versus gasoil prices as crude oil prices revert to levels in H1 June 2025.

·         Recovery in light-grade base oils margins curbs pressure on refiners to adjust output of those supplies.

·         Any moves to sustain base oils output at current levels would coincide with completion of most plant-maintenance work in the region.

·         Steady output, combined with resumption of normal plant operations, would coincide with seasonal slowdown in demand in coming weeks.

·         Lower margins earlier this month provided an incentive for refiners to adjust output.

·         Any such moves would help to limit any supply-demand imbalance.

·         Higher margins complicate any such decision to adjust output, raising prospect of larger supply-demand imbalance.    

·         Taiwan’s base oils exports show signs of dipping in June 2025 to lowest level since start of the year.

·         Slowdown in shipments could partially cushion impact of improving availability in Asia-Pacific market.

·         Heavy-grade exports in June 2025 account for largest share of Taiwan’s base oils shipments in five months.

·         Singapore’s base oils exports over last four weeks rise to three-month high.

·         Exports rise as shipments from domestic suppliers climb to three-month high.

·         Rise in exports from domestic sources precedes prospect of further pick-up in flows from Singapore in coming months following expected start-up of new production capacity in the island-state.

·         Exports over last four weeks get further boost from rise in re-exports of supplies from other markets to highest in more than three years.

·         Sustainability of re-export volumes at that level could be challenging in face of sustained slowdown in Singapore’s base oils imports in last four weeks to lowest level this year.

·         Imports could stay lower if planned pick-up in domestic base oils production capacity in coming months curbs need for the kind of additional volumes that Singapore imported in late-2024 and Q1 2025.

·         South Korea’s base oils supply exceeds demand in May 2025 for first time in four months amid recovery in domestic output and still-low exports.

·         Replenished stocks leave refiners well positioned to boost Group II base oils exports and to cushion impact of Group III base oils maintenance work at end-Q2 2025 and early Q3 2025.

·         Any such rise in exports raises prospect of adding to regional supply at same time as demand faces seasonal slowdown.

·         China’s Group II base oils supply, or output and imports combined, holds steady in Jan-May 2025 from year-earlier levels, contrasting with dip in supply of Group I base oils and rise in supply of Group III base oils.

·         China’s falling Group I base oils supply contrasts with rising Group I base oils imports in Jan-May 2025, boosting the import-share of total Group I supply.

·         China’s steady or rising supply of premium-grade base oils contrasts with falling Group II and Group III base oils imports in Jan-May 2025, cutting the import-share of total premium-grade supply.

·         Trend highlights China’s growing self-sufficiency for premium-grade base oils and growing reliance on overseas markets for Group I base oils.

·         Trend points to change in opportunities and challenges for overseas suppliers.

·         Saudi Arabia’s base oils shipments from ports of Yanbu/Jeddah show signs of slipping in June 2025 after higher shipment volumes in April-May 2025.

·         Pick-up in shipments in April-May 2025 coincides with/helps to balance out impact of plant-maintenance work in US, Europe, Middle East and India during that period.

·         Slowdown in shipments in June 2025 follows completion of most of that plant-maintenance work.

·         Dip in shipments could slow pace of any build-up of surplus supplies ahead of seasonal slowdown in demand during Q3 2025.