Asia base oils demand outlook: Week of 29 September

·         Asia’s base oils demand could turn more cautious amid improving availability of supply.

·         Rising supply gives buyers more flexibility to procure smaller volumes more frequently.

·         Rising supply raises concern about exposure to price-volatility, adding to attraction of managing stocks carefully.

·         Prospect of increased competition for market-share adds to concern about price-volatility and need to manage stocks carefully.

·         Weaker demand and rise in supply could limit regional refiners’ leverage to adjust prices in response to recent rise in crude oil prices.

·         Steadier prices could be a repercussion, which could support steadier demand.

·         Demand for Group I brightstock could ease amid waning concern about availability of supply.

·         Expectations of rise in availability of brightstock, and of alternative supplies from Singapore, could raise concern about sustainability of unusually steep brightstock premium to other base oils grades.

·         Premium of FOB Asia brightstock price over SN 500 price extends rise in H2 Sept 2025 to highest in more than four years.

·         FOB Asia brightstock price-premium to SN 500 averaged around $163/tonne in 2024 and $122/tonne in 2023.

·         China’s base oils demand could ease as seasonal pick-up in lube consumption faces prospect of fading over coming weeks.

·         Any lingering stocks from surge in base oils supplies ahead of seasonal pick-up in consumption could further curb buying interest.

·         China’s base oils supply surges to five-month high in Aug 2025 on back of higher output and steady imports.

·         Any signs of seasonal rise in lube demand lagging expectations would leave larger inventory volumes to clear, adding to buyers’ preference to hold back.

·         Any signs of domestic base oils prices facing more downward pressure would further incentivize buyers to delay any stock-replenishment plans. 

·         China’s domestic Group II light-grade price extends fall versus FOB Asia cargo price and falls sharply versus domestic diesel prices.

·         Weaker N150 price-differentials add to signs that seasonal pick-up in supply-demand fundamentals has peaked.

·         China’s domestic Group I SN 400 price extends sharp rise relative to FOB Asia cargo price and relative to domestic Group II heavy-grade price.

·         Price-strength points to strong demand or tight supply.

·         Price strength and signs of strong supply-demand fundamentals coincide with pick-up in spot availability of Group I heavy-neutrals from northeast Asia.

·         Pick-up in spot availability instead points to weaker supply-demand fundamentals.

·         Demand in southeast Asia could ease as rise in Asia-Pacific base oils exports to the region in Aug 2025 helps to replenish blenders’ stocks.

·         Exports from Singapore to southeast Asia stay higher than usual over last four weeks even as they slip from previous week.

·         Higher volumes likely keep blenders’ stocks at healthy levels, curbing urgency to seek additional volumes.

·         India’s base oils demand could be more mixed.

·         Blenders’ base oils stocks likely remain lower than usual, especially for light grades, ahead of seasonal pick-up in demand from end of third quarter.

·         Lower stocks follow slump in India’s base oils imports to six-month low in Aug 2025.

·         Lower stocks likely to support requirements for additional supplies.

·         India’s imported Group II cargo prices maintain steady-to-firm premium to FOB Asia and FOB US cargo prices, reflecting that dynamic.

·         Asia’s base oils exports to India improve in Aug 2025 but are still second-lowest in seven months.

·         Rise in Asia’s exports likely to boost India’s total base oils imports in Sept 2025.

·         Larger rebound in India’s imports in Sept 2025 would also need higher volumes from other key sources like Middle East and US.

·         India’s imports from Saudi Arabia shows signs of rising strongly in Sept 2025 following lower-than-usual shipments from the Middle East country in recent months.

·         Signs of strong rise in India's imports in Sept 2025, and subsequent replenishment of stocks, could then prompt buyers to slow pace of additional procurement plans.

·         Buyers could seek to maintain inventories at lower levels than usual amid expectations of pick-up in supply in domestic market and in southeast Asia as new production comes online.   

·         Rise in supply would give buyers more options and more flexibility to maintain lower stocks.

·         Rise in supply could impact base oils prices, adding to attraction of procuring smaller volumes more frequently.

·         Demand in Middle East for Group II heavy grades from Asia could get support from increasingly competitive prices vs Group I base oils.

·         Ex-tank Sharjah Group I SN 500 price-premium to CFR UAE Group II N500 widens in H2 Sept 2025 to highest level in more than two years.

·         Widening Group I price-premium and healthy availability of Group II base oils incentivize buyers to procure more Group II heavy grades instead.