· Asia’s base oils demand could be firmer than usual for the time of year as higher crude oil prices and growing concern about supply disruptions counter weaker supply-demand fundamentals.· Demand for Group I heavy neutrals and Group III base oils especially could get support from concern that any supply disruptions would have more direct impact on those products.· Concern about tighter supply of Group I heavy neutrals could support stronger demand for Group II heavy grades as an alternative.· Any sustained pressure on margins for light-grade base oils could impact supply of those products, prompting buyers to secure additional volumes in response.· Concern about any such changes in supply coincides with seasonal slowdown in demand in Asia, monsoon season in India and completion of more plant-maintenance work.· Asia’s lube demand likely to fall in Q3 2025 from Q2 2025, reflecting seasonal slowdown in consumption..· Buyers face challenge of balancing impact of higher crude oil prices and concern about supply disruptions with weaker end-user demand and expected rise in supply in coming months..· China’s base oils demand shows signs of staying muted as consumption faces seasonal slowdown and more plant maintenance draws to close.· China's higher domestic outright Group II light-grade prices stay weak relative to diesel prices, incentivizing refiners to trim output.· Higher domestic outright prices struggle to keep pace with rising FOB Asia cargo prices, curbing attraction of moving more arbitrage shipments to China..· China’s weak base oils prices relative to other markets point to lack of urgency to secure additional volumes..· Concern about supply disruptions could incentivize buyers in southeast Asia to maintain higher inventories than they had previously planned.· Seasonal slowdown in demand and signs of healthy inventory levels could curb size of any such pick-up in demand.· Singapore’s base oils exports to southeast Asia over last four weeks stay relatively firm, after rising in May 2025 to multi-year high..· Firm exports likely to cover larger share of regional blenders’ requirements at a time when demand faces seasonal slowdown.· Firm shipments follow sustained surplus of Asia base oils exports over southeast Asia’s lube demand in three months to April 2025..· Surplus contrasts with exports shortfall during same period last year, likely leaves blenders with healthy inventories in Q2 2025..· Singapore’s base oils exports to India over last four weeks rise to highest level in more than three years.· Rise in exports raises prospect of sustaining India’s base oils imports at high levels over coming weeks.· India’s imported Group II N150 cargo price premium to FOB Asia price slides in June 2025 to lowest in almost a year..· Lower premium points to more immediate impact of higher crude oil prices on FOB Asia N150 prices than on CFR India prices.· Lower CFR India premium could point to more muted demand and sufficient stocks even in face of possibility of refiners trimming run-rates.· Drop in CFR India N150 price-premium follows rise in country’s base oils imports to one-year high in May 2025, with trend of high volumes showing signs of extending into June 2025. .· High imports and weak domestic lube demand could trigger rise in surplus supplies.· Firm base oils prices relative to other markets sustain incentive to move more shipments to India, adding to prospect of rise in surplus supplies.· Firm base oils prices and firm imports could instead point to strong demand or tight availability of certain base oils grades and need to lock in more of those supplies from overseas markets.· Those grades could include very-light-grade base oils and Group I heavy neutrals.· Demand for very-light grade base oils could get support from still-steep discount of CFR India N70 price versus India’s retail diesel prices..· Discount of CFR India N70 to diesel prices stays steeper than usual even after narrowing slightly in June 2025.· Wide discount contrasts with falling CFR India N70 premium to Singapore gasoil prices, which could trigger drop in such shipments to India.· Demand for Group I heavy neutrals could get support from concern about supply-disruptions from Iran.· Any such disruptions would follow recent maintenance work on a base oils unit in Iran that is a key source of Group I heavy neutrals..India’s May base oils imports stay high.Asia base oils demand outlook: Week of 16 June
