Asia base oils supply outlook: Week of 20 October

·         Asia’s Group II base oils prices rise versus gasoil prices to highest in more than a month for heavy grades, highest since Q2 2025 for light grades.

·         Rising base oils margins point to firm supply-demand fundamentals, incentivizing refiners to maintain or raise output.

·         Incentive to raise output follows rise in base oils exports from Asia’s largest suppliers to thirteen-month high in Sept 2025.

·         Shipments rise on simultaneous pick-up in exports from South Korea, Taiwan and Singapore.

·         Rise in supply precedes lighter round of plant-maintenance in Asia over coming months.

·         Rise in supply coincides with still closed-arbitrage to Americas.

·         Rise in supply and closed arbitrage to more distant markets suggests regional demand is strong, or that regional demand will need to be strong to absorb the pick-up in volumes.

·         Increasingly high Group I SN 500 price in Middle East relative to FOB Asia Group I/II prices boosts feasibility of lining up arb shipments to that region.

·         Signs of recent pick-up in shipments to Middle East could curb its ability to absorb additional volumes even with feasible arbitrage to move more supplies to the region.

·         South Korea’s base oils exports rise to eleven-month high in Sept 2025.

·         Rise in exports adds to signs of improving supply in Asia.

·         Light round of plant-maintenance work in Q4 2025 and start-up of new units in Asia raise prospect of supply continuing to rise.

·         Rising exports and improving supply help to cover more requirements in Asia and in regular outlets for Asia shipments like India and Middle East.

·         Rising exports and improving supply could curb requirements for additional volumes from sources like US.

·         Rising exports and surplus supply could then start to target more distant markets unless prices adjust in a way that complicate such moves or that incentivize run-cuts.

·         Taiwan’s base oils exports stay at more elevated levels so far in Oct 2025, extending a trend of higher-than-usual volumes throughout most of this year.

·         Heavy-grade base oils account for larger share of Taiwan’s exports in Sept 2025 and so far in Oct 2025.

·         Higher heavy-grade share of exports allows Taiwan to tap higher margins for Group II N500 versus lighter grades.

·         Higher share of heavy-grade exports keeps tighter for longer Asia’s availability of Group II light grades.

·         Taiwan’s base oils exports to India and southeast Asia account for 60% of its total shipments in Sept 2025 and 54% share of total exports in Jan-Sept 2025.

·         Rising share of exports bound for India and southeast Asia reduces Taiwan’s reliance on China as major outlet for its supplies.

·         Rising share of exports bound for India and southeast Asia could get more problematic following recent start-up of new Group II unit in Singapore and imminent start-up of new capacity in India.

·         Prospect of rising supply in southeast Asia and India could put pressure on shipments from Taiwan to target other markets instead.

·         Singapore’s base oils supply shows mixed signals, with exports over last four weeks holding relatively firm in narrow range.

·         Export volumes remain well above recent lows in H2 July 2025, but close to typical levels over past year even after recent start-up of new base oils unit.

·         Singapore’s base oils imports over last four weeks by contrast extend sharp slowdown.

·         Any extension of that trend would slow build-up of supplies in southeast Asia.

·         Any extension of that trend could instead add to supply in the markets where the shipments originated from.