The U.S. agreed to reduce tariffs on Chinese imports to 30% from their previously established 145%, while China would cut its import duty on American goods to 10% from 125% for 90 days, effective May 14.

Aside from any direct impact that the tariffs may have on base oils, lubricants, additives, greases, polyalphaolefins and other related products, the changing situation first and foremost affected crude oil prices. When the temporary tariff agreement was announced last week, oil futures jumped to multi-week highs, but values fell at the start of the week as oil prices were depressed by Moody’s downgrade of the U.S. sovereign credit rating and official data that showed declining growth in China’s industrial output and retail sales.

One of the signs that economic activity has slowed down in a country is a reduction in energy demand, particularly of crude oil. The volume of surplus crude oil in China available for storage surged in April for a second straight month as imports stayed relatively high and refinery processing slipped, Reuters reported. Similarly, market players said that crude oil imports into South Korea were down significantly in April from a year ago given poor refining margins in Asia and a heavy refinery turnaround schedule.

Group I

Base oil demand has slipped in China, reflecting a slowdown in economic segments such as industrial output, construction, marine, railway and heavy-duty transportation. Some experts blamed the slowdown on the tit-for-tat trade dispute with the U.S. Many of the heavy-viscosity base oils in the API Group category were affected by the more moderate activity pace, although demand for bright stock remained healthy and prices were lifted by tight supply in the region.

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, with prices either staying on a steady course or edging up slightly over the last few weeks. Some buyers opted for using Group II base oils in lieu of Group I cuts whenever formulations allowed as prices for the Group II light grade were more competitive.

Chinese importers and domestic suppliers were striving to place product and reduce inventories as a less active lubricant production season approached.

Similarly, in India, the start of the monsoon season in June was expected to dampen demand for base oils and lubricants–from industrial applications in particular–but orders should be robust in May as consumers build inventories ahead of the heavy rains that complicate transportation and logistics.

The tight availability and climbing Group I prices in Southeast Asia pushed more Indian buyers to seek domestic supplies. India also sources some Group I grades from Iran, but a turnaround at an Iranian plant was expected to curtail availability.

Despite the need to stock up product ahead of the monsoons, Indian buyers were also cautions about acquiring base oils at current levels as prices may have not reached a bottom yet and there may be a chance that values could lose ground in the coming weeks, especially if crude oil prices and gasoil remained on a downward trend.

Group II

The restart of Asian Group II plants following turnarounds fanned expectations that additional product would become available and that this would exert downward pressure on pricing. Additionally, lower crude oil and feedstock values also weighed on base oil indications.

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 after the producer rebuilds stocks.

In China, with the exception of a couple of units, most plants were running well and availability was deemed plentiful. Chinese consumers counted on being able to secure material from local base oils plants, as well as from Southeast Asia and South Korea.

Larger volumes of Group II base oils than what is currently being shipped 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. Nevertheless, Formosa Petrochemical – the sole Group II producer in Taiwan – still ships base oils to China under contract.

The increased availability of Group II cuts in South Korea was expected to add to the stream of offers to India, although a South Korean producer was heard to be running at reduced rates due to feedstock supply issues and this may curtail spot supplies. Domestic production was also likely to fulfill a large portion of demand in India.

Group II volumes moving to India from the U.S. have dwindled due to turnarounds in that country amid steep prices, which made the arbitrage more difficult to work, although one of the turnarounds has been completed and more product should become available in the U.S. The producer has also lowered its domestic posted prices due to falling crude oil values and growing availability.

Group III

In China, competition between domestic Group III producers and foreign suppliers to protect or gain market share continued to place pressure on pricing. Plant turnarounds in South Korea, the Middle East and Europe were anticipated to curb spot availability and push regional prices up. China is also considered a lower-priced destination that attracts fewer cargoes if producers are able to achieve higher profits in other regions.

While Group III demand in India is not as robust as for Group II grades, particularly from the automotive industry, a tighter global supply and demand scenario due to plant turnarounds have pushed import prices up on a CFR India basis. South Korean product was more limited because of maintenance at one plant, and a second supplier not offering much spot supply.

Shipping

Several shipping inquiries were under discussion, including a 1,600-metric ton cargo that was likely to be shipped from Onsan, South Korea, to Jingjiang, China, in late May. A 1,500-ton lot was on the table for shipment from Onsan to Zhangjiagang, China, between May 20-25. About 1,200 tons were expected to be shipped from Onsan to Singapore in mid May. About 20,000-28,000 tons were being considered for shipment from Yeosu, South Korea, to Mumbai, India and the United Arab Emirates in the first half of June. A 3,000-ton cargo was mentioned for possible shipment from Onsan to Savannah, U.S., in the first half of July.

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. Later in the year, 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 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 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. (BPCL) 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 shut 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 shut down its Group II plant in Pascagoula, Mississippi, in April for a four-week turnaround and catalyst change, and had built inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. The plant was heard to have been restarted and additional product should become available in the next few weeks. 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, Adnoc shut down its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, for two to three weeks in early May.

Bapco was heard to have started a 45-day turnaround at its Group III facilities in Sitra, Bahrain.

Prices

Crude oil futures retreated on Monday as concerns about economic growth and industrial activity in the U.S. and China weighed on prices.

On May 19, Brent July 2025 futures were trading at $65.11 per barrel on the London-based ICE Futures Europe exchange, from $65.85/bbl on May 12.

Dubai front month crude oil (Platts) financial futures for June 2025 settled at $64.06/bbl on the CME on May 16, compared to $63.64/bbl for front-month futures on May 9.

In terms of base oil spot transactions, this was a transitional week as buyers and sellers tried to find their bearings regarding product needs and pricing and trading was subdued. Spot prices were generally stable, although lengthening supplies were exerting pressure on Group II values. 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. Group I solvent neutral 150 was unchanged at $800-$840/t and SN500 held at $1,030-$1,070/t. Bright stock prices were firm at $1,380-$1,420/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were heard at $830-$870/t and 500N was assessed at $1,080-$1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged at $660-$700/t and SN500 hovered at $920-$960/t. Bright stock prices were firm at $1,270-$1,310/t, FOB Asia on tight supplies.

Group II 150N was unchanged at $680-$720/t FOB Asia and 500N was holding at $960-$1,000/t FOB Asia.

In the Group III segment, 4 cSt was assessed at $1,080-$1,120/t, 6 cSt at $1,090-$1,130/t and 8 cSt was steady at $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.