Much attention was focused on China’s response to the new import duties, as the country is being hit with 34% levies on top of other tariffs. China had already been dealing with a slowing economy after the pandemic, and a trade war with the U.S. will certainly not help.

Many Chinese base oil consumers have adopted a cautious attitude and secured those volumes that they anticipated would be needed to keep day-to-day operations running. They preferred to secure domestic supplies whenever possible to decrease exposure to steeper imports and potentially higher transportation costs.

The heavier API Group I base oils were in short supply within China, and buyers have turned to imports from Southeast Asia to fill the gap. However, Southeast Asian exports had increased steadily over the last few months on account of tight availability because of healthy demand, and recent and ongoing plant turnarounds. An Indonesian producer was heard to be rebuilding stocks following a scheduled shutdown and a Thai supplier was also padding its inventories to cover requirements during an upcoming turnaround. This has led to reduced spot supplies from these producers and climbing indications for those few May cargoes that came into the market. Thai production appeared to have not been affected by a strong earthquake that devastated parts of Myanmar and Thailand last week.

Chinese buyers had accepted some of the higher offers for Southeast Asian Group I bright stock, as demand from the agricultural, industrial, railway and marine segments was ongoing and the country suffers from a chronic deficit of this grade. However, buyers have started to resist the steeper import prices, particularly as domestic suppliers have lowered their prices and a local producer was expected to bring additional bright stock capacity into the market.

The same cautious attitude applied to Group II cargoes as prices on the international market have climbed over the last several weeks due to tight availability on the back of plant turnarounds, but local producers have adjusted prices down to maintain their competitive edge.

Group II light grades appeared to be more readily available from South Korea, and this has started to place pressure on spot pricing. The heavy grades were still snug and prices were stable.

With an increase in domestic Group III production over the last five years and competitive moves by local suppliers, Chinese buyers preferred to acquire domestic product and avoid the risks associated with imports. Participants were also keeping an eye on an upcoming plant turnaround in the Middle East, which may curtail availability.

In the second half of the year, availability of most grades was expected to improve in Asia as the heavy turnaround schedule comes to an end, but the question is whether demand will have improved by then and will be able to absorb the additional product coming into the market.

In India, a small uptick in consumption levels was noted ahead of the end of the fiscal year on March 31, but spot activity was expected to abate in the coming weeks as consumers rely on term volumes. Financial uncertainties still dampened business, despite the fact that the Indian economy is the third largest in the region after China and Japan, and is expected to become the fourth largest in the world by 2026, surpassing Japan, according to recently disclosed forecasts.

Still, India’s GDP for the fiscal year that ended in March was predicted to hit 6.4%, the lowest in four years, and the Reserve Bank of India was expected to lower its benchmark interest rate again at its next monetary policy meeting on April 7-9, following a previous rate cut triggered by cooling inflation and slowing economic growth.

Consumers were still assessing product needs for the next few months and monitoring the impact of U.S. reciprocal tariffs on the markets. Most Indian exports would be subject to a 26% tariff, while India imposes an average tariff of 17% on imports, although it varies widely, depending on the category of goods.

In agriculture, India’s tariff is 39%, compared to 5% in the U.S.

According to Reuters, unlike Canada and the European Union, India is actively seeking to appease the Trump administration as it hikes the pressure on its trading partners, and is open to cutting tariffs on over half of U.S. imports worth $23 billion. India was understood to be considering eliminating taxes on U.S. liquefied natural gas and other energy imports. It was not clear whether these would include base oils. India typically imports large amounts of U.S. base oils, particularly in the fourth quarter, when U.S. suppliers strive to lower inventories ahead of the end of the year. India and the U.S. are currently in discussions regarding a bilateral trade agreement, with an initial phase expected to be completed by September/October this year.

Some Indian buyers continued to show restraint in terms of purchases at current price levels because of slumping crude oil and gasoil prices, as there was a good chance that base oils prices would follow the same path.

Spot availability of Group I grades was still snug in the region, but as local plants complete their turnarounds, more product was expected to be offered and prices were expected to stabilize. There were expectations that additional product would be available from Middle East suppliers as religious holidays come to an end. At least one Indian producer was anticipated to resume full production in late March or early April (as mentioned in the Production section below) and an Indonesian producer has also restarted its plant. Import prices discussed on a CFR India basis have shown a slight increase of $5 per metric ton week on week for the Group I SN500 grade.

On the other hand, CFR India prices for the Group II 150N have slipped by about $5/t because of adequate availability of imports from South Korea and the U.S., and the need to compete with domestic supplies. A local producer was expected to complete a maintenance program at the end of March or early April, bringing more product into the market.

Group III prices were somewhat mixed, with tight spot supplies of the 4 cSt grade leading to higher prices for imports, offered at an increase of $5/t on a CFR India basis. There was some downward pressure on the 6 cSt grade because of lengthening Middle East supplies.

In shipping circles, it was heard that a 7,500-metric ton cargo was expected to be lifted in the U.S. Gulf for West Coast India in April. About 1,500 tons were discussed for prompt shipment from Melaka, Malaysia, to India. A 10,000-ton lot was mentioned for shipment from Daesan and Pyongtaek, South Korea, to Mumbai and Kandla in the first half of April. About 12,000 tons were under consideration for shipment from South Korea to West Coast India and the Middle East in mid April.

Production

The global base oil supply and demand balance may become more strained in the coming months as a string of permanent plant closures, unplanned outages and maintenance programs will reduce availability.

Within the Group I segment, the Pertamina Group I plant in Cilacap, Indonesia, underwent maintenance work from mid January until late February/early March, according to reports. This had constrained the volumes available for export from the facility, but the plant was heard to have been restarted and additional cargoes were expected to be offered into the spot market.

In India, Hindustan Petroleum Corp. Ltd. was expected to have started a partial Group I and Group II turnaround in late Feb. that may last until end of March/early April.

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. There were expectations that Fushun would be ready to start producing additional Group I in April.

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

In Japan, tight Group I conditions persisted after the extended shutdown of a Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, but the plant was heard to have been restarted. 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 was expected to be shut down in February 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 on Group I supplies was the ten-day turnaround at the IRPC Group I plant in Thailand in May. While the producer was expected 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 Group I lube base oil production unit from mid July until late August.

Within the Group II segment, a number of planned turnarounds and an unplanned run cut may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have started a forty-five day turnaround at its Group II/Group III plant in Yeosu in late Feb. and had built inventories to cover term commitments during the outage, but spot supplies remained limited. The plant was anticipated to complete the maintenance program in April.

Also in South Korea, Hyundai Oilbank Shell Base Oil had significantly reduced operating rates at its base oil plant since early March due to a refinery outage which had limited the plant’s feedstock supply. Rates were heard to have been increased, with the plant now running at around 80% capacity.

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

As mentioned above, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant starting this month. Sinopec was also expected to shut down its Jinan unit for one month in April.

In India, it was heard that Bharat Petroleum Corp. Ltd. would be completing maintenance work at its Group II facilities in Mumbai in March. The maintenance program started in late Feb.

In the Middle East, Luberef will be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for maintenance at the end of the first quarter or beginning of the second quarter and was expected to limit spot sales to build inventories ahead of the shutdown.

In the U.S., Chevron was also preparing to shut down its Group II plant in Pascagoula, Mississippi, in April for a three to four-week turnaround and was expected to build inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. There was no direct confirmation about the turnaround from the producer.

In the Group III segment, SK Enmove will 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, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in late March/early April, but details could not be confirmed.

Prices

Crude oil futures plummeted to their lowest since 2021 on Monday morning on fears about a possible global recession triggered by Trump’s tariffs.

On April 6, Brent June 2025 futures traded at $63.71 per barrel on the London-based ICE Futures Europe exchange, from $74.01/bbl for May futures on March 31.

Dubai front month crude oil (Platts) financial futures for May 2025 settled at $66.48/bbl on the CME on April 4, compared to $74/bbl for April futures on March 28.

Spot base oil prices were generally steady to firm, depending on supply and demand fundamentals. 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 steady to firm. Group I solvent neutral 150 was assessed at $790-830/t, but the SN500 edged up by $10/t to $1,040-1,080/t. Bright stock prices also moved up by $10/t to $1,370/t-1,410/t, all ex-tank Singapore.

Prices for Group II 150 neutral were heard at $840/t-880/t, but 500N was higher by $10/t at $1,080/t-1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 hovered at $660/t-700/t, but SN500 inched up by $10/t to $910/t-950/t. Bright stock prices were also steeper by $10/t at $1,230-1,270/t, FOB Asia on tight supplies.

Group II 150N was steady at $720/t-760/t FOB Asia, while 500N held at $970/t-1,010/t FOB Asia.

In the Group III segment, 4 cSt edged up by $10/t to $1,060/t-1,100/t, and 6 cSt was also higher by $10/t at $1,070/t-1,110/t. The 8 cSt was steady at $950/t-990/t, all FOB Asia.

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.