· Asia’s base oils demand could soften as weakening supply-demand fundamentals incentivize buyers to maintain lower stocks.· Seasonal slowdown in lube consumption set to coincide with pick-up in supply following restart of growing number of plants after maintenance work.· Weaker demand in markets like Japan frees up more surplus volumes for export, adding to supply.· Weaker regional demand and improving supply coincide with still-firm base oils margins that reflect tighter supply-demand fundamentals.· Signs of mismatch between base oils margins and supply-demand fundamentals add to incentive to hold back..· China’s base oils demand for overseas supplies likely to face growing pressure from pick-up in domestic supply and seasonal slowdown in consumption.· Seasonal slowdown incentivizes blenders to procure smaller volumes more regularly from domestic refiners.· Completion of most plant maintenance work in China facilitates such moves.· Demand for Group I brightstock could face additional pressure following restart of domestic unit in China after shutdown since Q3 2024.· China’s domestic brightstock price-premium to FOB Asia cargo price falls at end-May 2025 to lowest level in almost three months..· Falling premium points to more muted demand for overseas supplies, curbs attraction of moving more brightstock to China..· Japan’s base oils/lube demand falls in April 2025 for third month..· Any extension of that contraction to other markets would magnify impact of typical slowdown in regional demand at start of second quarter.· Drop in lube demand coincides with weaker industrial production and exports, points to growing impact of US tariffs..· Demand in southeast Asia could stay lower as seasonal slowdown in consumption would magnify any extension of recent fall in lube demand.· Weaker demand would coincide with signs of healthy availability from Singapore, prospect of improving availability from South Korea and firmer exports from Japan.· Singapore’s base oils exports to southeast Asia hold at more elevated levels in four weeks to end-May 2025..· Healthy availability of supply gives buyers the leverage to procure smaller volumes more frequently.· Singapore’s base oils exports to India also hold at more elevated levels in four weeks to end-May 2025.· High export volumes coincide with and help curb impact of extension of plant shutdown in India through June 2025..· High export volumes coincide with still-firm CFR India Group II light-grade cargo price premium to FOB Asia cargo price..· Wide premium points to ongoing buying interest, facilitates more arbitrage shipments to India.· Demand holds firm even as India’s monsoon season begins in late-May 2025, earlier than usual.· Demand holds firm even as India’s base oils supply exceeds demand in April 2025 by largest volume in two years..· Surplus supply masks tight heavy-grade supply because of plant maintenance in northeast Asia, India and Middle East during three months to end-May 2025.· Availability of heavy-grade base oils set to improve following expected completion of most such plant maintenance work by start of June 2025.· Improving availability of heavy-grade supply could curb pressure on buyers to lock in sufficient volumes to cover requirements.· Drop in CFR India Group II N500 premium to FOB Asia cargo price at end-May 2025 could be early sign of such a dynamic.· Demand for light-grade base oils could hold firmer even with those supplies accounting for large share of India’s surplus in April 2025.· CFR India Group II light-grade base oils price-discount to country’s domestic diesel price holds close to widest level in seven months..· Wide discount to domestic diesel price often coincides with stronger demand for light-grade base oils.· Dynamic could continue until that discount starts to narrow..Japan’s April base oil/lube demand falls.India's April base oils supply exceeds demand.Asia base oils demand outlook: Week of 26 May
