Asia base oils demand outlook: Week of 1 September

·         Asia’s base oils demand could stay more cautious amid expectations of healthy availability of supply, concern about exposure to lower prices.

·         Cautious buying would coincide with likely seasonal pick-up in lube consumption in coming weeks.

·         Dynamic leaves blenders facing challenge of holding sufficient supplies to meet finished lube demand while maximising benefit of any further fall in base oils prices.

·         Expectations of healthy availability of supply incentivize blenders to procure smaller volumes more frequently.

·         Signs that blenders replenished inventories earlier in Q3 2025 give them additional flexibility and incentive to procure smaller volumes.

·         Lack of any significant price-volatility so far in Q3 2025 coincides with signs that any build-up of surplus supplies remains manageable.

·         Dynamic could incentivize buyers to maintain scheduled procurement plans.

·         Asia’s base oils demand shows signs of holding firmer than expected at start of Q3 2025.

·         Dynamic could reflect blenders’ moves to replenish low stocks after tight fundamentals in H1 2025 complicated such moves.

·         Dynamic could also reflect rising end-user consumption.

·         With replenished stocks, blenders could face less urgency to seek additional volumes later in Q3 2025.

·         South Korea’s base oils demand rises in July 2025 for fourth time in five months from year-earlier levels.

·         Firm demand mirrors steady rise in South Korea’s leading economic indicators.

·         Japan’s base oils demand edges down in July 2025 from year-earlier levels.

·         Pace of contraction slows sharply vs four months to May 2025, while demand in June-July 2025 still rises from year-earlier levels.

·         Steadier demand adds to signs of firmer-than-expected consumption in Asia at start of Q3 2025.

·         Demand in southeast Asia could face more muted pick-up in requirements in coming weeks if blenders are comfortable with current inventories.

·         Dynamic could leave blenders topping up stocks with smaller volumes.

·         Singapore’s base oils exports to southeast Asia show signs of holding steady in Aug 2025.

·         Shipments hold steady in July-Aug 2025 but account for larger share of Singapore’s total exports than in Q2 2025.

·         Higher share of shipments coincides with signs of firmer demand in southeast Asia than in other markets.

·         Ex-tank Singapore Group II heavy-grade price-premium to FOB Asia cargo price stays unusually high even as it edges lower at end-Aug 2025.

·         Steep price-premium points to rise in surplus supplies of Group II heavy grades.

·         Steep price-premium points to muted impact on ex-tank Singapore prices of rise in surplus supplies.

·         Any extension of drop in price-premium at end-Aug 2025 could point to rise in surplus supplies starting to have larger impact on ex-tank and southeast Asia market.

·         China’s base oils demand typically gets support from seasonal pick-up in lube consumption in late-Q3.

·         China’s domestic Group II light-grade base oils prices rise relative to diesel and relative to FOB Asia cargo prices in recent weeks.

·         China’s domestic Group I base oils prices also extend rise versus diesel and FOB Asia cargo prices.

·         Rising price-differentials make arbitrage more feasible.

·         Rising price-differentials point to firmer supply-demand fundamentals.

·         India’s base oils demand could hold steady amid signs that blenders’ stocks remain balanced-to-tight.

·         India’s base oils supply exceeds demand in July 2025, partially balancing out shortfall in June 2025.

·         Asia’s base oils export volume to India is typically about 40% of the country’s import volume the following month.

·         Extension of that trend, following slump in Asia’s exports to India in July 2025, raises prospect of fall in India’s imports in Aug 2025.

·         Fall in imports would cushion impact of seasonal slowdown in demand, leaving net supply relatively balanced.

·         More balanced net supply would curb any significant build-up of blenders’ stocks ahead of seasonal pick-up in consumption from end-Q3.

·         Prospect of ongoing need for additional shipments coincides with signs of improving surplus supply in overseas markets.

·         India’s CFR Group II base oils price-premium to FOB Asia cargo price holds in relatively narrow range since April 2025, especially for heavy grades.

·         Range-bound price-premium points to ongoing buying interest.

·         Buyers face challenge of securing sufficient supplies while managing exposure to risk of lower prices in response to rising availability.

·         Dynamic incentivizes buyers to procure smaller volumes more frequently in order to average down and benefit from any downward price adjustments.

·         Singapore’s base oils exports to India show signs of rising in Aug 2025 from unusually low level in July 2025.

·         Exports remain lower than during four months to end-June 2025.

·         Lower exports could reflect signs of more cautious demand.