Global base oils margins outlook: Week of 15 September

·         Global base oils prices mostly hold firm versus feedstock/competing fuel prices.

·         Firm margins point to strong supply-demand fundamentals, incentivize refiners to maintain or raise output.

·         Demand would need to hold firm to absorb steady-to-higher supplies.

·         Any signs of demand weakening, combined with firm margins, could speed up rise in surplus supplies.

·         FOB Asia base oils prices hold steady relative to Singapore gasoil.

·         Group II heavy-grade price-premium to gasoil stays relatively firm even if well below highs in Q2 2025.

·         Group II light-grade price-premium to gasoil also remains down from peak levels in Q2 2025, but size of fall from those peak levels is smaller than for heavy grades.

·         Firm light/heavy grade margins point to strong supply-demand fundamentals, sustain incentive for refiners to maintain high base oils output.

·         China’s domestic Group II N150 price-premium to Shandong diesel prices falls for first time since H1 July 2025.

·         Price-premium edges down but remains close to highest since May 2025.

·         Price-premium similarly rose in Q3 2024, before pause in H1 Sept 2025, then extending rise to end-Sept 2024.

·         Similar trend this year would point to ongoing support from seasonal rise in demand.

·         On-going pause or drop in price-premium over coming weeks conversely suggests any support from seasonal rise in demand has begun to wane.

·         CFR India Group II N70 price-premium to Singapore gasoil steadies after slipping during most of past month.

·         Base oils premium stays at relatively elevated level even after recent fall.

·         Elevated base oils price-premium sustains incentive for overseas refiners to produce and move more very-light-grade base oils to India.

·         Elevated premium, and incentive to move more shipments to India, point to demand that remains sufficiently strong to attract and absorb such supplies.

·         Europe Group III 4cSt (low) price-premium to vacuum gasoil (VGO) rises to highest since Oct 2024.

·         Rise in Group III 4cSt price-premium outpaces firm Group II N150 price-premium to VGO, contrasts with weaker SN 150 premium to VGO.

·         Rise in Group III 4cSt price-premium also outpaces steady US Group III 4cSt premium to VGO.

·         Outperformance of Europe Group III 4cSt base oils points to stronger supply-demand fundamentals vs other grades and regions.

·         Outperformance boosts incentive to increase Group III supply in Europe market.

·         US Group III 4cSt base oils price premium to VGO holds firm in narrow range since end-May 2025.

·         Firm Group III 4cSt premium contrasts with weakening Group II light-grade premium to VGO since mid-May 2025.

·         Group III 4cSt premium to VGO remains well below unusually high levels at end-2022, but well above levels before 2020.

·         Recent strength of Group III margins in US and in Europe and relative to Group II suggests that impact of plant-maintenance work in Q2 2025 extends well beyond completion of that maintenance work.