· Asia’s base oils demand could be steadier, with blenders likely to have already secured supplies required to cover seasonal pick-up in demand over coming weeks.· Recent moves to replenish stocks added to demand and tightened supply.· Demand could ease following completion of those moves.· For buyers with sufficient supplies, falling crude oil prices add to incentive to hold back.· Falling crude prices, rising base oils margins and any signs of supply-demand fundamentals balancing out would raise concern about exposure to price adjustments..· Any such concerns would add to preference to hold back. · Narrow gap between FOB Asia prices and prices in destination markets like China and India continues to complicate arbitrage to those markets.· Less feasible arbitrage suggests buyers would have to raise bids if they need to secure replenishment supplies.· Persistence of narrow gap between FOB Asia prices and CFR India and CFR Northeast Asia prices suggests buyers have sufficient supplies to avoid need to raise bids.· Discount of US export prices widens vs prices in markets like India..· Wider discount facilitates arbitrage shipments from US.· Wider discount incentivizes buyers to hold back until they are confident that any further drop in US export prices has been completed. .· China’s base oils imports would need to rise strongly in Jan-Feb 2025 to make up for drop in domestic base oils output in first two months of 2025.· China’s domestic Group II N150/N500 price premium to FOB Asia prices trends lower so far this year.· China’s domestic Group I brightstock premium to FOB Asia price stays well below year-earlier levels at a time of year when it usually peaks..· Lower price premium complicate arbitrage, pointing to muted interest in lining up additional supplies from overseas markets.· China’s lower output and lower price premium to FOB Asia prices point to lower demand in Jan-Feb 2025 compared with year-earlier levels..· Singapore’s base oils exports to southeast Asia surge in past week to highest since end-2023.· Rise in shipments lifts total exports to southeast Asia over past four weeks to highest in more than three years..· Rise in shipments enables buyers to replenish stocks ahead of seasonal rise in demand.· Rise in shipments helps to cover for drop in supplies from other sources like South Korea..· Japan’s domestic base oils and lube demand rises in Jan 2025 for second month from year-earlier levels..· Any extension of pick-up in consumption could limit Japan’s surplus base oils supplies and any further recovery in country’s exports.· Dynamic would leave buyers in southeast Asia especially increasing their reliance on additional Group I supplies from more distant markets..· India’s CFR Group II base oils price premium to FOB Asia prices stays narrow, with N150 premium narrowing further..· Narrow premium cuts attraction of moving more supplies to India.· Narrow premium points to muted buying interest even amid signs of firm domestic lube consumption.· Narrow premium suggests buyers have secured sufficient supplies to cover requirements, especially in view of likely seasonal drop in lube consumption in month of April.· Narrow premium to FOB Asia prices contrasts with widening CFR India Group II premium to US export prices.· Contrasting dynamics point to availability of supplies from other sources.· Narrow CFR India premium to FOB Asia prices contrasts with widening FOB Asia Group II price premium to Singapore gasoil prices, which points to tightening supply-demand fundamentals.· Contrasting price trends suggest that supply is tighter than expected, or that demand is weaker than expected.· Contrasting trends suggest that one of the price trends will have to adjust accordingly.· Any signs that supply-demand fundamentals are steadier or improving, rather than tightening further, would add to buyers’ preference to hold back in anticipation of adjustment in base oils prices..Japan’s January base oils supply falls.China’s February base oils output mixed.Asia base oils demand outlook: Week of 3 March