China’s demand for Group I base oils continues to be strong, despite an economic slowdown since last year that depressed industrial activity. Additionally, the ongoing trade dispute with the United States, fanned by tariffs imposed on Chinese imports by the U.S. also added a degree of uncertainty to the country’s economic prospects.

“Economists warn that Trump’s tariffs risk pushing more manufacturers over the brink or accelerating the relocation of production out of China – inflicting more pain on an already fragile job market and exacerbating the country’s deflationary pressures,” Nikkei Asia reported online. China was looking to strengthen ties with other countries in the region to offset the impact that the new U.S. trade regulations may have on its exports.

Some of the new U.S. tariffs may also have a huge impact on trade with other countries in Asia. Trump’s plan to impose levies of around 25% on automotive imports in April would directly affect South Korea and Japan, as they are the top sources of vehicles outside of North America. The price of imported cars could go up, likely leading to reduced sales and lower demand for factory-fill lubricants. Japanese Trade Minister Yoji Muto plans to visit the U.S. in March to discuss an exemption from the tariffs, according to reports.

Other countries, such as Thailand, could also see negative impacts from new U.S. blanket tariffs on imports. Thailand’s economy grew 2.5% year on year in 2024, stimulated by a 3.2% expansion in the fourth quarter that was largely driven by healthy exports and domestic consumption. However, global trade disputes threaten its growth outlook for 2025.

Thailand has been a focus of much attention in terms of Group I exports because Asia has a structural deficit of Group I capacity due to plant rationalization, but the country still produces Group I base oils. However, a large portion of production is absorbed domestically leaving only a fraction for export. These were in high demand in recent weeks, particularly as several plant turnarounds loom.

Singapore also increased exports of Group I and II grades in recent months, and ExxonMobil hopes to bring additional Group II production online later in the year. The company will offer a Group II heavy-viscosity base oil with similar characteristics to Group I bright stock. While some participants worried that the additional capacity would flood the market with product and place pressure on prices, others said that the volumes would likely be absorbed in the region as demand for the heavy grades was robust, particularly in China.

Another active Group II player was Taiwanese producer Formosa Petrochemical, which had exported cargoes to several destinations in Asia and the Middle East because spot volumes moving to China have decreased. These shipments also helped fill the availability gap from South Korea because of reduced run rate periods late last year and upcoming turnarounds.

Lubricant demand was expected to increase with the arrival of warmer temperatures and the spring oil change season in China, and blenders were therefore preparing base oil stocks for increased consumption. At the same time, several base oil plants were anticipated to be undergoing maintenance in the next few weeks, decreasing availability. These conditions placed upward pressure on prices, particularly of the heavy viscosity grades.

However, domestic prices were still deemed more attractive than import prices, although the difference was smaller than the same period in previous years. Given a deficit of bright stock in China, demand for imports was still robust and buyers appeared willing to bid at higher levels to secure product from Southeast Asia. Exports from Singapore to China and India have picked up since the beginning of the month, and there was buying interest for shipments from other origins as well.

Indian base oil demand has started to show signs of strengthening, although some of the interest may be related to buyers trying to beat potential price hikes as regional availability of certain grades has tightened. Group I and Group II prices quoted on a CFR India basis have edged up by $5 per ton to $10/t week-on-week because of reduced availability. Group III prices were largely stable on more muted trading.

India’s demand for base oils has been less robust than expected, following the year-end holidays and the approach of the end of the fiscal year on March 31. Observers said that lubricant demand has softened because of weaker economic development than expected, and this has dragged on consumption from the automotive and industrial segments. This could be because of a slowdown in India’s economic growth last year. India’s GDP growth rate during 2024-25 is estimated to reach 6.4%, compared with 8.2% in 2023-24, according to online data published by India’s Statistics Ministry.

South Korean exports to India have slowed down because of more limited availability and buyers appeared to be looking for alternative sources of product. This may be due to general demand conditions in India, but also because of recent reductions in operating rates and upcoming turnarounds in South Korea, leading to a general tightening of supplies and higher pricing. Indian imports from the Middle East may also be impacted by reduced exports from Saudi Arabia due to upcoming turnarounds, while Group II spot imports from the U.S. have also been less abundant at this time of the year than in years past. This may be due to lower availability at origin and steep pricing. At the same time, Indian buyers have been able to rely more heavily on domestic supplies as local refiners were running plants consistently and capacity has increased in the country.

As discussed over the last few weeks, there are expectations that the regional base oil supply and demand balance may become strained in the coming months, as a string of permanent plant closures and maintenance programs will reduce availability.

Within the Group I segment in India, Hindustan Petroleum Corp. Ltd. was expected to start a partial Group I turnaround this month that may last until April.

The Pertamina Group I plant in Cilacap, Indonesia, was expected to undergo maintenance work from mid January until late February, according to reports. This has constrained the volumes available for export from this facility.

In China, PetroChina’s Dalian Petrochemical Group I plant in Liaoning province was shut down permanently in late 2024 due to the expected closure of the associated refinery in mid 2025 for its relocation. At the same time, there had been expectations that China National Petroleum Corporation/PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils that would likely help offset the Dalian closure, market sources said. Fushun has not yet confirmed the Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 metric tons per year. Fushun was expected to have a six to eight-week turnaround in late Q2 or early Q3 2025, according to sources.

In Japan, tight Group I conditions persisted after the extended shutdown of Idemitsu Kosan’s Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, with a restart expected last December. This plant has been scheduled for a turnaround in May. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program which began in September 2024 and was completed at end of the year. Eneos also plans to complete maintenance at its Kainan and Mizushima plants this year. The Mizushima B plant will be shut down this month for an extended turnaround that will last until May. All of these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the last three years.

Another outage that was expected to have some impact was the 10-day turnaround at the IRPC Group I plant in Thailand in May, and preparations for the shutdown may coincide with a seasonal demand increase. While the producer was likely to build inventories ahead of the outage to meet term obligations, it was likely to prioritize domestic commitments and reduce volumes offered for spot business.

Further down the road, it was heard that Thai Lube Base Oil PLC may be shutting down a lube base oil production unit from early July until mid-August.

Within the Group II segment, a number of turnarounds may also result in tight supply of certain grades.

In China, an unplanned outage at the CNOOC Group II unit in Huizhou may be impacting availability in the domestic market.

Also in China, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant to commence in March.

There were also reports that South Korean producer GS Caltex was preparing for a forty-five day turnaround at its Group II/Group III plant in Yeosu, starting later this month, and was building inventories to cover term commitments during the outage.

In the Group III segment, SK Enmove will also be completing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Bahrain’s Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra starting in March.

Luberef will also be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for maintenance in the second or third quarter.

Prices

Crude oil futures slipped in Asia on Monday, extending a downward trend from the previous week on expectations that exports from Iraqi Kurdistan’s oilfields would resume soon. Analysts also were waiting to see if there would be any progress on the talks to resolve Russia’s attack on Ukraine. If sanctions were to be lifted on Russian exports, there would be additional crude oil entering the global supply system, but this may take a while.

On Feb. 24, Brent April 2025 futures traded at $74.48 per barrel on the London-based ICE Futures Europe exchange, from $75.14/bbl on Feb. 17.

Dubai front month crude oil (Platts) financial futures for March 2025 settled at $74.75/bbl on the CME on Feb. 21, compared to $74.68/bbl on Feb. 14.

Spot base oil prices were steady to firm this week and continued to be impacted by a tighter supply and demand scenario for some grades. The price ranges portrayed below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were generally stable to firm from a week ago. The Group I solvent neutral 150 grade was unchanged at $780/t-820/t and SN500 was also steady at $1,040/t-1,080/t. Bright stock prices were up by $10/t at $1,350-1,390/t, all ex-tank Singapore.

Prices for the Group II 150 neutral hovered at $840/t-880/t and 500N was steady at $1,070/t-1,110/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $650/t-690/t and SN500 was assessed at $890/t-930/t. Bright stock prices edged up by $10/t to $1,200-1,240/t, FOB Asia on limited supplies.

The Group II 150N was steady at $710/t-750/t FOB Asia, while the 500N was holding at $940/t-990/t FOB Asia.

In the Group III segment, the 4 cSt grade was heard at $1,020/t-1,060/t, and the 6 cSt was assessed at $1,050/t-1,090/t. The 8 cSt cut was unchanged at $950/t-990/t.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.
Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.