· Asia’s base oils demand could get support from moves to lock in supplies to meet seasonal pick-up in demand during final weeks of Q3 2025.· Demand could have already got steady underlying support in recent weeks because of tighter-than-expected supply-demand fundamentals at start of Q3 2025.· Persistently tighter fundamentals could prompt buyers to maintain higher stocks until they are confident about any sustained improvement in supply.· Improving visibility over economic outlook could provide further support.· Those various dynamics could be supporting steady-to-firm base oils demand in southeast Asia..· Singapore’s base oils exports to southeast Asia hold firm in four-weeks to end-July 2025 even as they slip from June 2025..· Firm exports contrast with sharper fall in Singapore’s base oils exports to China and India..· Firm exports to southeast Asia in July 2025 follow pick-up in Vietnam’s base oils/lube imports in June 2025..· Pick-up in shipments mirrors growing number of other markets showing improving demand at end-Q2 2025..· Japan’s base oils demand rises in June 2025 for first time in four months from year-earlier levels to eleven-month high..· Stronger domestic consumption accounts for close to 90% of Japan’s total supply in June 2025..· Domestic demand’s higher-than-usual share of supply slashes volumes available for export.· Japan’s exports to southeast Asia duly slump in June 2025 to seven-month low..· Drop in Japan’s exports in June 2025 precedes Group I plant-maintenance work in Thailand in July 2025, leaving buyers targeting shrinking number of sources of Group I base oils.· Asia’s Group I base oils prices outperform Group II prices in recent weeks, reflecting their firmer fundamentals..· South Korea’s base oils demand also rises in June 2025 from year-earlier levels, climbing at fastest pace in almost two years.· South Korea’s base oils demand also rises in month of June from previous month for first time in four years..· Unusual rise in demand in month of June from May could reflect buyers’ moves to replenish lower-than-usual stocks.· Lower-than-usual stocks could reflect combination of tighter-than-usual domestic supply and concern about outlook for economy and industrial production.· Any extension of similar factors affecting stocks and consumption in other markets could support firmer-than-expected regional demand in early-Q3 2025..· China’s base oils demand shows signs of staying weaker, with scant moves to start replenishing stocks before seasonal pick-up in activity at end-Q3 2025.· China’s weak domestic Group II base oils margins incentivize domestic refiners to trim output.· China’s domestic Group II base oils price-premium to FOB Asia cargo prices narrows further..· Narrower premium also incentivizes overseas refiners to trim shipments to China.· Singapore’s base oils imports from China extend surge in recent weeks, after slowdown in flows during seven months to May 2025..· Pick-up in shipments adds to signs of rising surplus volumes in China, even with lower supply.· Dynamic points either to increasingly slack demand in China, or to prospect of strong pick-up in its requirements over shorter period in a few weeks’ time..· India’s imported Group II heavy-grade price-premium to FOB Asia cargo price extends fall for second week.· Even with drop in premium, heavy-grade differential stays firm and well above year-earlier levels..· India’s Group II heavy-grade price also maintains steep premium to US export prices.· Price-strength points to ongoing buying interest in Group II heavy grades.· Recent drop in Group II heavy-grade price differential could reflect weaker demand because of concern about exposure to lower prices, rather than just outright drop in demand.· Recent strength of CFR India Group I heavy-grade price-premium to FOB Asia cargo price adds to signs of still-firm demand for heavy-grade supplies..· Mixed price signals for Group II heavy grades extends to ex-tank Singapore market.· Premium of ex-tank Singapore Group II heavy-grade price to FOB Asia cargo price holds close to highest since early-2024 after surging over last two months..· Widening ex-tank premium partly reflects weakness of FOB Asia cargo price.· Any extension of that cargo-price weakness to markets in southeast Asia or to smaller-volume shipments would typically also put pressure on ex-tank price..Asia base oils demand outlook: Week of 28 July.S Korea’s June base oils output falls.Japan’s June base oils supply lags demand.Base Oil News stories and analyses also available on the ICIS platform
