This development pushed crude oil futures up early in the week, extending the recent uptrend on hopes of a resolution in the U.S.-China trade war, with Brent trading near $65 per barrel from $60/bbl a week ago.

A reduction in tariffs was also welcome news to base oil and lubricant market participants, as the steep duties had already dampened business prospects for the year. Many U.S. producers and manufacturers feared that tariffs on raw materials imported from China would push prices of finished products up and they would not be able to be recouped as competition among suppliers was high and margins have already been squeezed for some time. Similarly, Chinese producers worried about steep tariffs imposed on U.S. products such as additives, polyalphaolefins and other raw materials.

The latest China Manufacturing Purchasing Managers’ Index had already showed a contraction in factory activity in April, reflecting a drop in factory activity since January 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 and other related economic sectors.

These events coincided with the start of the more sedate season for base oils and lubricant consumption in China. Most production is completed during the spring to meet demand during the warmer summer months, and requirements tend to slow down in June.

Group I

One base oil segment that was affected by a slowdown in economic activity in China was the API Group category, as these base stocks are used in industrial, marine, railway and heavy duty applications. But China has a deficit of the heavy viscosity grades, with bright stock always a sought-after gem, so prices have not decreased much despite the drop in demand. Most Group I base oils remained in limited supply in Asia given the permanent shutdown of several plants in recent years and ongoing turnarounds in Japan, Southeast Asia and the Middle East.

Chinese importers and domestic suppliers had reduced prices of most base oils on sluggish demand and ample inventories, and sellers had striven to place product ahead of a slower lubricant market season starting next month in China, but bright stock defied the pricing trend. Bright stock prices edged up given the difficulties in locating sizable cargoes in the region.

An Indonesian refiner was heard to have offered a small bright stock cargo through a tender last week, but the results were not available by the publishing deadline.

In India, consumers were also concerned about the limited availability of Group I cuts, even though Indian producers have increased output of these grades and many buyers preferred to source product domestically to avoid risks associated with logistics and transportation. Some Group I cargoes move regularly to India from Iran, but a turnaround at an Iranian plant was expected to curtail supplies.

Plant turnarounds in Southeast Asia and the Middle East were anticipated to reduce the number of cargoes moving to India, driving import prices up, especially in the case of bright stock. However, plentiful domestic availability offset some of the pressure to acquire imported cargoes at higher prices. Increased supplies of Group II cargoes at competitive levels also encouraged a switch to Group II base oils whenever formulations permitted.

Indian blenders tried to build inventories ahead of the monsoon season starting in June, when the heavy rains complicate logistics and transportation, but they were unsure about future lubricant demand during the rainy season, and whether fresh base oil shipments would be absorbed. They wanted to avoid being caught with hefty inventories of pricey product that may lose value in the coming weeks if crude oil and feedstock price slipped.

Group II

Group II supplies have become more plentiful in Asia following a recent plant turnaround and restart in South Korea. South Korean producer GS Caltex completed a maintenance program at the end of April and was heard to have resumed production, with additional spot volumes anticipated to become available in the next few weeks, although it may take some time for the producer to rebuild inventories. The heightened availability of Group II grades has started to exert downward pressure on regional pricing.

With the exception of a couple of units, most Group II plants in China were running well and domestic product was deemed sufficient to meet a large portion of requirements. Large volumes of Group II base oils also used to move to China from Taiwan, but the reimposition of duties on Taiwanese products last year has led to a reduction in spot shipments, although many cargoes still move to China under contract.

Increased South Korean availability of Group II cuts and subdued demand were exerting downward pressure on Group II imports in China.

Additional cargoes of Group II cuts from South Korea were expected to move to India this month as well as GS Caltex resumed production, and more spot cargoes were expected to be offered, which has started to exert downward pressure on spot indications to India. There were offers from other regional suppliers as well, with additional volumes expected to be traded for June shipment. Domestic production was also fairly steady in India, meeting much of the local demand.

Group II imports from the U.S. were not widely available as turnarounds in that country and high prices did not support arbitrage movements.

Group III

In China, there was ongoing competition between domestic Group III producers who sought to protect or gain market share, and imports, although plant turnarounds in South Korea, the Middle East and Europe were expected to curtail spot availability and push regional prices up. Lower prices in China attracted less interest to move overseas cargoes there.

With Group III supplies having tightened on a global scale due to plant turnarounds, import priced have edged up in India. Buyers there have little choice but to accept the higher pricing. South Korean product was more limited because of maintenance at one plant, and a second supplier not offering much spot supply. Bids and offers for Group III grades have reportedly edged up by about $5-$10/t on a CFR India basis.

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. was expected to restart its Group I unit in late April/early May 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 in May, but this was not confirmed by the producer directly.

Also in India, Chennai Petroleum Corp. Ltd. had a scheduled 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. The plant was expected to be restarted this month.

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 this month. 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 45-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 that may be completed this month.

Sinopec was also expected to have 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.

Also in India, HPCL was heard to be planning a 45-day turnaround at its Group II trains in May, but this was not confirmed by the producer directly.

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 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 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.

Also affecting global Group III supplies was an unplanned shutdown leading to a force majeure at the ILBOC (SK-Repsol) Group II/Group III plant in Cartagena, Spain, which was triggered by an unprecedented power outage in the Iberian Peninsula on April 28.

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 started a 45-day turnaround at its Group III facilities in Sitra, Bahrain.

Prices

Crude oil futures surged over 3% in Asian trading on Monday after the U.S. and China agreed to temporarily slash tariffs, igniting hopes of stronger energy demand from the world’s top two oil consumers along with heightened industrial activity.

On May 12, Brent July 2025 futures were trading at $65.85 per barrel on the London-based ICE Futures Europe exchange, from $60.41/bbl on May 5.

Dubai front month crude oil (Platts) financial futures for June 2025 settled at $63.64/bbl on the CME on May 9, compared to $60.65/bbl for front-month futures on May 2.

Spot base oil prices were somewhat mixed 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 lower. Group I solvent neutral 150 was unchanged at $800-$840/t but SN500 slipped by $10/t to $1,030-$1,070/t. Bright stock prices were firm at $1,380-$1,420/t, all ex-tank Singapore.

Prices for Group II 150 neutral edged down by $10/t to $830-$870/t but 500N was steady at $1,080-$1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed at $660-$700/t, and SN500 edged up by $10/t to $920-$960/t. Bright stock prices were also up by $10/t at $1,270-$1,310/t, FOB Asia on tight supplies.

Group II 150N slipped by $10/t to $680-$720/t FOB Asia on lengthening supplies, and 500N was also lower by $10/t at $960-$1,000/t FOB Asia.

In the Group III segment, the 4 cSt grade was assessed up by $10/t at $1,080-$1,120/t, and the 6 cSt was also up by $10/t at $1,090-$1,130/t. The 8 cSt moved up by $10/t as well to $960-$1,000/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.