Asia base oils demand outlook: Week of 27 October

·         Asia’s base oils demand likely to stay muted amid expectations of ready availability of supply and waning consumption at year-end.

·         Recent volatility of crude oil prices adds to attraction of holding back.

·         Even so, firm China/India prices vs FOB Asia cargo prices point to ongoing buying interest in those markets.

·         Asia’s lube demand typically peaks in month of October in the second half of the year before slowing during final two months of the year.

·         Demand likely to follow similar trend in Q4 2025.

·         Dynamic suggests blenders required sufficient base oils volumes in Aug-Oct 2025 to cover seasonal pick-up in demand.

·         Dynamic suggests blenders’ requirements for additional volumes now likely to ease.

·         Prospect of seasonal slowdown in demand over coming months would coincide with scant plant-maintenance work in Asia and expected start-up of additional production capacity.

·         Weak demand, sufficient stocks and healthy supply incentivize buyers to hold off stock-building and to procure sufficient volumes to cover lower requirements.

·         China’s base oils prices extend rise versus diesel and versus regional cargo prices.

·         Ongoing price-strength suggests pick-up in demand in Q3 2025 extends into start of Q4.

·         China’s base oils demand rises in Sept 2025 for third month, lifting Q3 consumption to highest for that period since 2021.

·         Extension of demand into Q4 2025 would help to absorb strong pick-up in supply in Aug-Sept 2025, limiting build-up of surplus volumes.

·         Steady demand, and shutdown of several Group II units in China, could slow further any build-up of surplus volumes.

·         Base oils demand in southeast Asia could be more muted as signs of healthy stocks give buyers leverage to hold back.

·         Base oils exports to southeast Asia from Asia’s key suppliers extend rise in Sept 2025 to highest level in more than a year, reflecting that dynamic.

·         Prospect of sufficient supply and lower crude oil prices add to incentive for buyers to limit size of inventories.

·         Singapore’s base oils exports to southeast Asia over last four weeks stay lower than usual.

·         Any extension of trend could facilitate blenders’ moves to work down existing stocks.

·         India’s CFR Group II cargo price-premium to FOB Asia price holds firm for N150, rises for N500.

·         Still-wide light-grade price-premium points to ongoing interest in additional supplies, with Asia the key source of those supplies.

·         Light-grade premium stays wide even amid prospect of India’s base oils imports holding at more elevated levels in Oct 2025 for second month.

·         Asia’s base oils exports to India rise in Sept 2025 to highest level in more than a year, reflecting that dynamic.

·         Several shipments from US reach India in H2 Oct 2025, adding further to supplies.

·         Signs of ongoing demand for additional volumes suggests that buyers’ inventories remain balanced-to-tight and end-user consumption remains firm.

·         Firm demand fundamentals could magnify impact of signs of slowdown in imports from Saudi Arabia in Oct 2025.

·         Imports from Saudi Arabia likely to fall further in Nov-Dec 2025 during round of plant-maintenance work in the country.