Asia base oils demand outlook: Week of 18 August

·         Asia’s base oils demand could get support from pick-up in requirements for replenishment volumes to meet seasonal rise in consumption during final weeks of Q3.

·         Simultaneous rise in requirements throughout Asia-Pacific region could magnify pick-up in demand and competition for supplies.

·         Blenders’ relatively lower stocks would add to need for additional supplies.

·         Firmer demand and refiners’ more limited supply-surplus could curb downward price-pressure.

·         Signs of rangebound prices would provide further support to pick-up in demand.

·         China’s domestic base oil prices rise relative to Shandong diesel and FOB Asia cargo prices in early-Aug 2025, pointing to signs of such a pick-up in demand.

·         Subsequent pause in price-recovery suggests that any such pick-up in demand is muted.

·         Singapore’s base oils exports to China extend sharp rebound over past four weeks.

·         Rise in shipments could reflect pick-up in demand more from term buyers.

·         Any signs of muted consumption of those additional supplies could trigger slowdown in subsequent shipments.

·         China’s domestic Group I SN 400 price-premium to FOB Asia SN 500 cargo price holds at highest level this year.

·         Higher domestic price-differential adds to increasingly firm Group I SN 500 price-differentials throughout Asia.

·         Demand in southeast Asia could hold steady.

·         Blenders’ lower stocks incentivize moves to maintain steady procurement.

·         Signs of lack of any significant build-up of surplus supplies curb concern about exposure to sudden price-correction.

·         Expectations of range-bound prices add to incentive to maintain steady procurement.

·         South Korea’s base oils exports to southeast Asia rise to one-year high in July 2025.

·         Rise in shipments contrasts with drop in South Korea’s total exports, pointing to firm buying interest in southeast Asia.

·         Recent slowdown in Singapore’s base oils exports to southeast Asia balances out rise in flows from South Korea, curbing prospect of sharp pick-up in shipments to the region.

·         Steady flows incentivize steady procurement.

·         Ex-tank Singapore Group II N500 price-premium to FOB Asia cargo price extends rise in Aug 2025.

·         Increasingly wide price-premium partly reflects weakness of FOB Asia cargo prices.

·         Firmer ex-tank Singapore prices, despite weaker FOB Asia cargo prices, point to fundamentals that are sufficiently supportive to limit any price-pressure.

·         India’s imported Group II base oils price-premium to FOB Asia cargo prices holds firm.

·         Firm price-premium facilitates ongoing flow of shipments to India.

·         Firm price-premium points to ongoing buying interest even after India’s base oils imports surge to fourteen-month high in July 2025.

·         Rise in imports helps to balance out India’s supply-shortfall in June 2025 and to cover strong domestic demand at start of Q3 2025.

·         Ongoing buying interest suggests rise in imports was insufficient to replenish blenders’ depleted stocks.

·         More rangebound CFR India price-premium to FOB Asia prices suggests blenders are more comfortable with inventory levels, while still seeking additional volumes.

·         Singapore’s base oils exports to India stay lower than usual over past four weeks.

·         Drop in shipments, and signs of ongoing buying interest, could boost demand for supplies from other sources.

·         Drop in shipments precedes arrival by end-Aug 2025 of large volume of shipments from various markets including Saudi Arabia, UAE, US and Europe, as well as regular flows from Asia.

·         Drop in shipments from Singapore could reflect prospect of arrival of those cargoes.

·         India’s imports of Group I heavy neutrals rebound in July 2025.

·         Shipments get boost from wave of supplies from less regular sources like Turkmenistan.

·         Shipments rise after India’s imported cargo prices outpace prices in Asia, Europe, Middle East and US in Q3 2025.

·         Sustained demand, despite higher prices and increasingly competitive Group II prices, point to ongoing structural requirements for Group I heavy neutrals.

·         India’s demand for very-light grade base oils could face pressure from rise in supply and less attractive arbitrage.

·         India’s imports of very-light grade base oils rise to ten-month high in July 2025, boosting supply.

·         India’s premium of domestic retail diesel prices over CFR India N70 price stays wider than usual.

·         But diesel premium to CFR India N70 price falls in August 2025 to narrowest level since early-2025.

·         Wider diesel premium to N70 price tends to coincide with firmer demand for very-light grade base oils, and vice-versa. 

·         Pakistan’s base oils demand could get boost as seasonal pick-up in consumption magnifies recent recovery in lube demand.

·         Demand could get further support from drop in base oils supply in Q2 2025, leaving blenders with lower stocks.

·         Prospect of rise in demand adds to attraction for overseas refiners to target Pakistan with more shipments and to boost their share of Pakistan’s base oils imports.

·         South Korea’s share of Pakistan’s base oils imports extends recovery in June 2025 and in H1 2025.

·         Prospect of rise in Asia’s base oils supply in coming months boosts importance for South Korea to maintain or expand its share of supplies in markets like Pakistan.