· Asia’s base oils demand likely to face more downward pressure as slowing industrial activity in key regional markets start to reflect impact of US tariffs.· Demand already slowed amid uncertainty about impact of tariffs.· Slowdown in demand highlights widespread repercussion of tariffs, even for products that are not directly impacted.· Slowdown in demand could exacerbate typical seasonal dip in base oils consumption from end-Q2.· Concern about weaker demand coincides with still-high base oils margins that reflect tight supply-demand fundamentals.· Crude oil prices extend slide, magnifying their disconnect with base oils prices and further boosting base oils margins.· Concern about disconnect between base oils fundamentals and prices could add to buyers’ preference to maintain low stocks..· China’s base oils demand could see earlier-than-usual slowdown in second quarter as economic activity slows.· Concern about slowdown incentivizes blenders to maintain low stocks and procure smaller volumes from domestic sources.· Expected restart of several base oils units in China in May 2025 would boost domestic supply, facilitating those moves.· Rising domestic supply and weaker demand likely to cut requirements for shipments from overseas markets.· China’s domestic price premium to FOB Asia cargo prices stay narrow or weakens for most grades except Group II N150..· Rising Group II N150 premium boosts feasibility of arbitrage shipments.· Dynamic points either to firmer demand or prospect of adjustment in domestic N150 premium to deter shipment of additional supplies from regional markets.· Singapore’s base oils exports to China in last four weeks extend steady slide to lowest level since H1 Feb 2025..· Rise in shipments in intervening months coincides with plant maintenance and seasonal rise in demand in China.· More recent slowdown in shipments could reflect removal of those factors that supported firmer demand.· Singapore’s base oils exports to southeast Asia improve in H2 April 2025, although total shipments over last four weeks stay lower than usual..· Lower export volumes could point to buyers' more muted moves to replenish stocks after peak-demand period at end-Q1 2025.· Lower shipment volumes follow firm export volumes from refiners in Asia to southeast Asia in Q1 2025..· Steady export volumes in Q1 2025 mirror and help to cover for firm lube consumption in southeast Asia in Jan-Feb 2025.· Any more widespread signs of slowdown in export volumes in Q2 2025 could point to sharper-than-usual drop in demand.· Sharp fall in Japan’s base oils/lube demand in March 2025 supports prospect of such a scenario..· Japan’s base oils/lube demand falls sharply in March 2025 from year earlier for second straight month..· Lower demand mirrors drop in Japan’s industrial production in March 2025 amid sharp slowdown in motor vehicle production.· Slowdown highlights indirect impact of US tariffs on Japan’s base oils demand.· Lower domestic demand cuts its share of Japan’s output to nineteen-month low in March 2025..· Lower share of output frees up more of Japan’s supplies for export market..· India’s base oils demand shows mixed signals.· Signs of high import volumes in April 2025 likely boost blenders’ depleted stocks.· Higher inventories curb pressure to seek additional volumes.· Lack of large surplus volumes in overseas markets curbs availability of supplies at unusually competitive prices.· Lack of availability of such volumes at competitive prices curbs attraction for buyers to seek additional supplies and build stocks.· Firm prices and expectations of improving availability of supply in coming weeks add to attraction of holding back..· But CFR India Group II N500 price premium to FOB Asia cargo price extends rise to highest in more than a year..· Rising Group II heavy-grade premium to FOB Asia cargo price contrasts with sliding premium the same time a year ago.· Rising Group II heavy-grade premium facilitates arbitrage, points to ongoing buying interest.· Demand for Group II heavy grades could get support from tighter availability of Group I heavy neutrals because of plant maintenance in Middle East.· Steep premium of Group II heavy grades over Group I prices could limit any such pick-up in demand..· Demand could hold firmer for very-light grade base oils, whose discount to India’s retail diesel price remains unusually wide..· Wide light-grade price discount to diesel price often supports firmer buying interest for light grades..Japan’s March base oils demand falls.Asia base oils demand outlook: Week of 28 April
· Asia’s base oils demand likely to face more downward pressure as slowing industrial activity in key regional markets start to reflect impact of US tariffs.· Demand already slowed amid uncertainty about impact of tariffs.· Slowdown in demand highlights widespread repercussion of tariffs, even for products that are not directly impacted.· Slowdown in demand could exacerbate typical seasonal dip in base oils consumption from end-Q2.· Concern about weaker demand coincides with still-high base oils margins that reflect tight supply-demand fundamentals.· Crude oil prices extend slide, magnifying their disconnect with base oils prices and further boosting base oils margins.· Concern about disconnect between base oils fundamentals and prices could add to buyers’ preference to maintain low stocks..· China’s base oils demand could see earlier-than-usual slowdown in second quarter as economic activity slows.· Concern about slowdown incentivizes blenders to maintain low stocks and procure smaller volumes from domestic sources.· Expected restart of several base oils units in China in May 2025 would boost domestic supply, facilitating those moves.· Rising domestic supply and weaker demand likely to cut requirements for shipments from overseas markets.· China’s domestic price premium to FOB Asia cargo prices stay narrow or weakens for most grades except Group II N150..· Rising Group II N150 premium boosts feasibility of arbitrage shipments.· Dynamic points either to firmer demand or prospect of adjustment in domestic N150 premium to deter shipment of additional supplies from regional markets.· Singapore’s base oils exports to China in last four weeks extend steady slide to lowest level since H1 Feb 2025..· Rise in shipments in intervening months coincides with plant maintenance and seasonal rise in demand in China.· More recent slowdown in shipments could reflect removal of those factors that supported firmer demand.· Singapore’s base oils exports to southeast Asia improve in H2 April 2025, although total shipments over last four weeks stay lower than usual..· Lower export volumes could point to buyers' more muted moves to replenish stocks after peak-demand period at end-Q1 2025.· Lower shipment volumes follow firm export volumes from refiners in Asia to southeast Asia in Q1 2025..· Steady export volumes in Q1 2025 mirror and help to cover for firm lube consumption in southeast Asia in Jan-Feb 2025.· Any more widespread signs of slowdown in export volumes in Q2 2025 could point to sharper-than-usual drop in demand.· Sharp fall in Japan’s base oils/lube demand in March 2025 supports prospect of such a scenario..· Japan’s base oils/lube demand falls sharply in March 2025 from year earlier for second straight month..· Lower demand mirrors drop in Japan’s industrial production in March 2025 amid sharp slowdown in motor vehicle production.· Slowdown highlights indirect impact of US tariffs on Japan’s base oils demand.· Lower domestic demand cuts its share of Japan’s output to nineteen-month low in March 2025..· Lower share of output frees up more of Japan’s supplies for export market..· India’s base oils demand shows mixed signals.· Signs of high import volumes in April 2025 likely boost blenders’ depleted stocks.· Higher inventories curb pressure to seek additional volumes.· Lack of large surplus volumes in overseas markets curbs availability of supplies at unusually competitive prices.· Lack of availability of such volumes at competitive prices curbs attraction for buyers to seek additional supplies and build stocks.· Firm prices and expectations of improving availability of supply in coming weeks add to attraction of holding back..· But CFR India Group II N500 price premium to FOB Asia cargo price extends rise to highest in more than a year..· Rising Group II heavy-grade premium to FOB Asia cargo price contrasts with sliding premium the same time a year ago.· Rising Group II heavy-grade premium facilitates arbitrage, points to ongoing buying interest.· Demand for Group II heavy grades could get support from tighter availability of Group I heavy neutrals because of plant maintenance in Middle East.· Steep premium of Group II heavy grades over Group I prices could limit any such pick-up in demand..· Demand could hold firmer for very-light grade base oils, whose discount to India’s retail diesel price remains unusually wide..· Wide light-grade price discount to diesel price often supports firmer buying interest for light grades..Japan’s March base oils demand falls.Asia base oils demand outlook: Week of 28 April
