In early April, Trump announced 10% duties on most countries but paused some of the steepest tariffs that would apply to many U.S.’ trade partners for 90 days. The Trump administration was in the midst of negotiating individual trade agreements with some of these countries, hoping to meet a self-imposed deadline of July 8. However, talks with China have hit an impasse, with the two countries fighting a tit-for-tat tariff battle that has led to steep levies on most Chinese imports of 145%, while a majority of U.S. goods moving to China are subject to 125% duties.

The latest China Manufacturing Purchasing Managers’ Index showed a contraction in factory activity. The official National Bureau of Statistics’ manufacturing PMI fell to 49.0 in April 2025 – the lowest reading since December 2023. This marks the first contraction in factory activity since January and a significant decline despite stimulus measures.

A contraction in factory activity in China was expected to affect lubricant consumption from the industrial segment, as well as from the marine transportation segment as shipments to the U.S. have slowed down and fewer vessels were covering the route.

At the same time, the steep tariffs imposed on U.S. products were impacting shipments of additives, polyalphaolefins and other raw materials to China, with consumers considering alternative sources such as Europe.

Since late February, Chinese buyers had been anxious to secure API Group I cargoes ahead of plant turnarounds in Thailand and Japan as spot availability was expected to tighten in Asia. However, a slowdown in downstream lubricant segments meant that many requirements could be met through existing stocks of imported product, or through domestic supplies, although bright stock was still deemed in deficit and this pushed prices higher.

Importers and domestic suppliers have reduced prices of most base oils as demand remained lackluster and inventories were plentiful, and sellers were hoping to place product ahead of a slower lubricant market season starting next month in China.

An Indonesian refiner was heard to have offered a bright stock cargo through a tender during the week, but it could not be ascertained whether Chinese buyers had shown interest in it. Supplies of the other Group I grades were also tight and bids and offers have edged up, but the increases were smaller than for bright stock because this is a difficult grade to replace and the number of refineries that produce it is also limited. Chinese importers prefer to secure cargoes from Southeast Asia as they are not subject to import duties, and this also limits their options.

Group II supplies appeared to be more plentiful in China, as well as in the rest of the region, despite a recent plant turnaround in South Korea. South Korean producer GS Caltex completed a 45-day maintenance program at the end of April and additional volumes were anticipated to enter the spot supply system over the next few weeks, although it may take some time for the producer to rebuild inventories.

Domestic Group III production in China was considered sufficient to meet a large portion of requirements, but Middle East product was also offered at competitive prices, although plant turnarounds in that region were expected to curtail spot availability and pressure prices up, particularly of the more popular 4 cSt grade. Automotive lubricant manufacturers were also trying to find the best raw material deals possible, which sometimes involved switching to local and regional suppliers – as U.S. imports of products such as additives were expected to skyrocket due to the newly imposed tariffs.

In terms of base oil shipments, a 17,000-metric ton cargo was expected to have loaded in Singapore to China in late April. About 4,000 tons were discussed for shipment from Ruwais, United Arab Emirates, to Nantong in mid May. Approximately 7,000 tons were mentioned for possible shipment from Hong Kong to Tianjin, China, and/or Busan, South Korea, in the early part of May.

Along similar lines as in China, in India, buyers expressed concerns about the strained availability of Group I cuts, even though Indian producers have generally increased output of these grades. The plant turnarounds in Southeast Asia and the Middle East were anticipated to trim the number of cargoes moving to India, exposing base oils to steeper pricing, especially in the case of bright stock. Imports of the Group I high-viscosity SN500 and bright stock were heard to have slightly edged up in India week on week.

Conversely, more abundant supplies of Group II cuts as a South Korean producer resumed production following a turnaround, and fairly firm operating rates at other facilities have started to exert downward pressure of spot offers into India.

Blenders found themselves in a quandary as they generally try to build inventories ahead of the monsoon season starting in June, but it was difficult to assess whether lubricant demand would be robust, and whether base oil prices might hold or edge down on falling crude oil and feedstock costs.

Buyers appeared more amiable to accepting steeper offers for the Group I heavy grade and bright stock as supplies from Southeast Asia and the Middle East have tightened. The light grade was more readily available and prices seemed to be holding.

There was a perception that Group II availability would be more plentiful as GS Caltex has resumed production, and there were offers from other regional suppliers as well, with additional volumes expected to become available in June. Domestic production was also fairly steady in India, and some buyers preferred to rely more heavily on local supplies instead of being exposed to risks associated with imports, such as long lead times and increasing freight rates.

Group II imports from the U.S. were not widely available as turnarounds in that country have also curtailed spot availability and pushed up prices.

Group III indications edged up slightly in India from the previous week as supplies have tightened on a global scale due to plant turnarounds, and India depends entirely on Group III imports from various sources, mainly South Korea and the Middle East. However, demand for Group III grades is more limited than for other cuts as most lubricant production does not require the use of the high-performance Group III base oils.

In terms of shipments to India, a 2,000-3,000-ton parcel was under discussion for shipment from Daesan, South Korea, to West Coast India in mid May. A second cargo of 3,000-5,000 tons was mentioned for possible shipment from Daesan to Hazira between May 10-20.

Other discussions of South Korean cargoes centered on a 1,160-ton parcel expected to be shipped from Onsan to Singapore in mid May. A 900-ton cargo was quoted for lifting in Onsan to Taichung, Taiwan, in mid May as well. A 4,000-ton lot was mentioned for possible shipment from Onsan to Los Angeles, U.S., in the second half of June. A 3,500-ton lot was on the table for shipment from Yeosu to Haiphong, Vietnam, in mid May.

Production

The global base oil supply and demand balance has become more strained as a string of permanent plant closures, unplanned outages and maintenance programs have reduced availability, and upcoming turnarounds may reduce supplies further.

In the Group I segment, Indian refiner Hindustan Petroleum Corp. Ltd. (HPCL) was expected to restart its Group I unit in mid to late April after a partial turnaround that started in late Feb. HPCL was also heard to be planning a 45-day turnaround at its Group II trains, but this could not be confirmed.

Also in India, Chennai Petroleum Corp. Ltd. scheduled a one-week turnaround at its Group I plant in Chennai in 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 late 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. It could not be ascertained whether the plant had been restarted.

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 from May until July. 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 in Japan this year. The Kainan plant will be shut down in May until June. The Mizushima B plant was expected to be shut down in Feb. for an extended turnaround that would last until May. The Mizushima A unit was scheduled for a one-month turnaround starting in October. 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.

Recently, 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 in the first quarter.

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 restarted operations following a forty-five day turnaround at its Group II/Group III unit in Yeosu in late Feb. The producer had built inventories to cover term commitments during the outage, but spot supplies remained limited. The plant was heard to have completed the maintenance program last week, but it could not be confirmed whether the unit was running at top rates.

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 heard to be running at around 80%-90% 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 in April.

Sinopec was also expected to shut down its Jinan Group II unit for one month in April.

In India, it was heard that Bharat Petroleum Corp. Ltd. completed 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 a two-week maintenance program (see Lube Report for more on this) 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. An update regarding the turnaround schedule was not forthcoming.

In the U.S., Chevron was expected to shut down its Group II plant in Pascagoula, Mississippi, in April for a three to four-week turnaround and has built 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 Group III at Ulsan, South Korea, for two months, starting in May. 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, ADNOC was expected to shut down its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, for two to three weeks in late April or early May.

Also in the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in early April, but the turnaround may have been delayed, although further details could not be confirmed.

Prices

Crude oil futures fell on Monday after the OPEC+ agreed to increase production by 411,000 barrels per day in June. Oil prices were mostly down in April, posting the biggest monthly loss since 2021. Trump’s tariffs have fanned fears of a global economic slowdown that would dampen demand at the same time that OPEC+ is increasing supply.

On May 5, Brent July 2025 futures were trading at $60.41 per barrel on the London-based ICE Futures Europe exchange, from $66.57 for June futures on April 28.

Dubai front month crude oil (Platts) financial futures for June 2025 settled at $60.65 per barrel on the CME on May 2, compared to $66.83/bbl for front-month futures on April 25.

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 slightly higher. Group I solvent neutral 150 was assessed up by $10/t at $800/t-$840/t, and SN500 held at $1,040/t-$1,080/t, although it was exposed to downward pressure. Bright stock prices were firm at $1,380/t-$1,420/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were heard at $840-$880/t with 500N at $1,080-$1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 inched up by $10/t to $660/t-$700/t and SN500 was assessed at $910/t-$950/t. Bright stock prices jumped by $20/t to $1,260/t-$1,300/t, FOB Asia on tight supplies.

Group II 150N was heard at $690-$730/t FOB Asia, while the 500N was holding at $970-$1,010/t FOB Asia.

In the Group III segment, 4 cSt was assessed up by $10/t at $1,070/t-$1,110/t and 6 cSt was also up by $10/t at $1,080/t-$1,120/t. The 8 cSt was assessed unchanged at $950/t-$990/t, all FOB Asia.

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