· Asia’s base oils demand could weaken in coming weeks amid seasonal slowdown in consumption.· Signs of more prolonged and widespread drop in regional lube consumption from year-earlier levels would magnify impact of seasonal slowdown.· Weaker demand in recent months cushions impact of tighter regional supply during that period.· Weaker demand in coming weeks could magnify impact of recovery in regional supply.· Demand could conversely get some support as buyers start to eye seasonal rise in demand in final weeks of third quarter.· Buyers would likely target supplies for delivery in late-August or early-September to cover that expected rise in demand.· Firmer price differentials for some base oils grades in China and India point to pockets of ongoing or stronger buying interest for those supplies.· China’s domestic price-premium for imported Group II light-grade base oils over prices for domestic supplies extends rise to highest in a year..· Widening price-premium for imported base oils contrasts with still-lower N150 premium to diesel for domestic supplies.· Dynamic points to weak fundamentals for supplies from domestic sources, and increasingly strong fundamentals for supplies from overseas sources.· Weaker demand for domestic supplies coincides with likely rise in domestic base oils production following completion of most plant-maintenance work in China.· Firmer domestic prices for imported supplies widens sharply their premium to FOB Asia cargo prices..· Wider premium makes arbitrage more feasible, despite weak fundamentals for domestic supplies.· Wider price-premium for imported supplies follows dip in shipments from Taiwan to China in recent months, and more recent slowdown in shipments from Singapore to China..· Singapore’s base oils exports over last four weeks fall more sharply to China than to southeast Asia or India, reflecting that dynamic..· Any extension of that trend could leave China with tighter availability of supplies for term buyers especially.· Slowdown in southeast Asia’s demand would reflect more the impact of a seasonal dip in requirements rather than the kind of rise in supply that China faces following plant-maintenance work..· Thailand’s lube demand falls in May 2025 for third month from year-earlier levels..· Drop in lube demand coincides with expectations of weaker economic growth and exports following US’ import-tariff announcement in April 2025.· Size of US tariffs on imports from Thailand could get more clarity over coming week.· Other key markets in southeast Asia likely to see similar dip in lube consumption for similar reasons..· Japan’s base oils/lube demand falls in May 2025 for fourth month from year-earlier levels..· Falling base oils/lube consumption coincides with Japan’s weaker automobile production and shrinking exports.· Dynamic highlights impact of US tariffs and uncertainty about additional tariffs.· Lower demand cushions impact of fall in Japan’s base oils output, mirroring similar trend in Asia.· Trend suggests Asia’s base oils prices and margins could have been even higher than they were in H1 2025 if demand had held steadier or rose, compounding regional supply-tightness.· Concern about US tariffs and subsequent slowdown in economic activity inadvertently helps to curb such a scenario.· Any extension of demand-weakness in regional markets like Japan could by contrast compound impact of expected pick-up in supply in coming months.· Scenario boosts importance of revival in regional demand to balance out pick-up in supply..· India’s CFR Group I base oil price-discount to Group II prices narrows, especially for light-grade supplies..· Narrower Group I discount to Group II coincides with widening CFR India Group I base oil premium to FOB Asia cargo prices.· Dynamic points to firmer fundamentals for India Group I base oils relative to other grades and other regions..· India’s CFR Group II heavy-grade base oils price-premium to FOB Asia cargo price holds unusually firm, especially vs year-earlier levels..· Price-premium holds firm even as demand faces prospect of seasonal slowdown this and next month that would compound any further year-on-year drop in consumption.· Firm CFR India price-premium to FOB Asia prices through Q2 2025 coincides with high import volumes that balance out lower domestic output.· Weaker domestic demand cushions further the impact of lower output.· India’s base oils supply matches demand in May 2025, reflecting that dynamic..· Weaker demand and likely rise in domestic base oils output in early-Q3 2025 curb urgency to attract additional supplies from overseas markets.· Firm CFR India price-premium instead sustains attraction of moving more shipments to India.· Dynamic could suggest there are other factors supporting ongoing buying interest for overseas supplies.· Those factors could include moves to secure shipments for delivery in late-Q3 2025, or concern about drop in flows of heavy-grade shipments from Middle East.· Without any such factors, incentive to move more shipments to India raises prospect of pick-up in surplus-supply..Japan’s May base oils output falls.Thailand May base oil supply stays high.India’s May base oils supply matches demand.Asia base oils demand outlook: Week of 30 June
· Asia’s base oils demand could weaken in coming weeks amid seasonal slowdown in consumption.· Signs of more prolonged and widespread drop in regional lube consumption from year-earlier levels would magnify impact of seasonal slowdown.· Weaker demand in recent months cushions impact of tighter regional supply during that period.· Weaker demand in coming weeks could magnify impact of recovery in regional supply.· Demand could conversely get some support as buyers start to eye seasonal rise in demand in final weeks of third quarter.· Buyers would likely target supplies for delivery in late-August or early-September to cover that expected rise in demand.· Firmer price differentials for some base oils grades in China and India point to pockets of ongoing or stronger buying interest for those supplies.· China’s domestic price-premium for imported Group II light-grade base oils over prices for domestic supplies extends rise to highest in a year..· Widening price-premium for imported base oils contrasts with still-lower N150 premium to diesel for domestic supplies.· Dynamic points to weak fundamentals for supplies from domestic sources, and increasingly strong fundamentals for supplies from overseas sources.· Weaker demand for domestic supplies coincides with likely rise in domestic base oils production following completion of most plant-maintenance work in China.· Firmer domestic prices for imported supplies widens sharply their premium to FOB Asia cargo prices..· Wider premium makes arbitrage more feasible, despite weak fundamentals for domestic supplies.· Wider price-premium for imported supplies follows dip in shipments from Taiwan to China in recent months, and more recent slowdown in shipments from Singapore to China..· Singapore’s base oils exports over last four weeks fall more sharply to China than to southeast Asia or India, reflecting that dynamic..· Any extension of that trend could leave China with tighter availability of supplies for term buyers especially.· Slowdown in southeast Asia’s demand would reflect more the impact of a seasonal dip in requirements rather than the kind of rise in supply that China faces following plant-maintenance work..· Thailand’s lube demand falls in May 2025 for third month from year-earlier levels..· Drop in lube demand coincides with expectations of weaker economic growth and exports following US’ import-tariff announcement in April 2025.· Size of US tariffs on imports from Thailand could get more clarity over coming week.· Other key markets in southeast Asia likely to see similar dip in lube consumption for similar reasons..· Japan’s base oils/lube demand falls in May 2025 for fourth month from year-earlier levels..· Falling base oils/lube consumption coincides with Japan’s weaker automobile production and shrinking exports.· Dynamic highlights impact of US tariffs and uncertainty about additional tariffs.· Lower demand cushions impact of fall in Japan’s base oils output, mirroring similar trend in Asia.· Trend suggests Asia’s base oils prices and margins could have been even higher than they were in H1 2025 if demand had held steadier or rose, compounding regional supply-tightness.· Concern about US tariffs and subsequent slowdown in economic activity inadvertently helps to curb such a scenario.· Any extension of demand-weakness in regional markets like Japan could by contrast compound impact of expected pick-up in supply in coming months.· Scenario boosts importance of revival in regional demand to balance out pick-up in supply..· India’s CFR Group I base oil price-discount to Group II prices narrows, especially for light-grade supplies..· Narrower Group I discount to Group II coincides with widening CFR India Group I base oil premium to FOB Asia cargo prices.· Dynamic points to firmer fundamentals for India Group I base oils relative to other grades and other regions..· India’s CFR Group II heavy-grade base oils price-premium to FOB Asia cargo price holds unusually firm, especially vs year-earlier levels..· Price-premium holds firm even as demand faces prospect of seasonal slowdown this and next month that would compound any further year-on-year drop in consumption.· Firm CFR India price-premium to FOB Asia prices through Q2 2025 coincides with high import volumes that balance out lower domestic output.· Weaker domestic demand cushions further the impact of lower output.· India’s base oils supply matches demand in May 2025, reflecting that dynamic..· Weaker demand and likely rise in domestic base oils output in early-Q3 2025 curb urgency to attract additional supplies from overseas markets.· Firm CFR India price-premium instead sustains attraction of moving more shipments to India.· Dynamic could suggest there are other factors supporting ongoing buying interest for overseas supplies.· Those factors could include moves to secure shipments for delivery in late-Q3 2025, or concern about drop in flows of heavy-grade shipments from Middle East.· Without any such factors, incentive to move more shipments to India raises prospect of pick-up in surplus-supply..Japan’s May base oils output falls.Thailand May base oil supply stays high.India’s May base oils supply matches demand.Asia base oils demand outlook: Week of 30 June
