Asia’s lube demand likely to revive later in Q1 2025

Asia’s lube demand is likely to stay lower at the start of this year before rising strongly later in the first quarter, after the lunar new year holidays.

Lube consumption is likely to rise to more than 2.35 million tonnes in the first quarter of the year, according to the Baseoilnews short-term outlook.

The volume would be up slightly from the fourth quarter of last year, but with most of the increase in consumption taking place from the month of February and especially March.

Consumption is likely to get a boost following the end of the lunar new year holidays which run from late-January into first-half February.  

Any such rise in consumption would coincide with the planned shutdown of a key Group II base oils unit in South Korea from end-February to mid-April.

Stronger demand and lower supply raises the prospect of tightening availability in Asia during that time.

Base oils prices typically get support from tight supply-demand fundamentals.

The scenario boosts the incentive for blenders to lock in sufficient base oils supplies early this year.

Any such moves would spread the seasonal pick-up in demand over several months rather than several weeks.

It would also coincide with and help to balance out a pick-up in surplus base oils supplies in the Asia-Pacific region at the end of last year and early this year.

Hedging tools could help to manage the price-exposure of such moves to bring forward procurement plans and build stocks early.

The base oil market’s current lack of hedging tools could conversely deter any such moves, raising the prospect of rising demand and falling supply overlapping each other in a few months’ time.