Despite the signing of preliminary trade agreements, some nations may start to feel the effects of the trade war initiated by United States’ President Donald Trump as steep tariffs will be imposed on their exports to the U.S., starting Aug. 7, as they had not reached a deal by the Aug. 1 deadline. The U.S. President announced hefty rates including a 35% duty on many goods from Canada, 25% for India, 20% for Taiwan, 50% for Brazil and 39% for Switzerland, according to a presidential executive order.

Meanwhile, the U.S. Federal Reserve announced last Wednesday that it would be holding rates steady for the fifth-straight time, despite pressure from President Trump to cut rates, arguing that his tariff policy would not push up inflation. The Federal Reserve should be able to have a clearer picture about how the economy is responding to Trump’s policies by its next meeting in mid-September, CNN.com reported. Other nations, especially those with strong ties to the U.S. economy, can be significantly impacted by the rate changes. For example, changes in the Chinese yuan’s value relative to the dollar may affect China’s exports. The dollar may depreciate when the Federal Reserve cuts interest rates, which could result in higher prices for Chinese goods on the American market. 

Group I

Most API Group I base oils remained exposed to upward pressure, but the first signs that supply levels have started to improve emerged in the shape of a couple of tenders. The imminent completion of plant turnarounds and a slowdown in consumption levels in most regions also freed up more availabilities of Group I grades. Bright stock was still the star of the show as it continued to capture much attention and its strained supply status drove offers up. But some of the Group I offers that are surfacing in Asia this week attracted limited interest because buyers preferred to continue running operations with existing stocks and wait for as long as possible for potential price adjustments in the coming weeks.

Despite an ongoing turnaround at its base oil plant, a Thai producer was heard to have brought Group I offers for September spot shipments in flexibags into the market this week. The producer was anticipated to complete its maintenace program in mid-August and be able to ship product next month. According to sources, prices for Group I SN500 were hovering around $1,090 per metric ton FCA Thailand, while bright stock could be obtained near $1,450 per metric ton FCA Thailand, for loading around Sep. 25.

Also last week, an Indonesian refiner announced a tender on July 29, closing on Aug. 1, for limited quantities of SN130, SN250 and bright stock for August loading, but the tender was subsequently retracted because of urgent domestic base oil needs, which took priority. Both Indonesian and Thai producers prioritize domestic requirements and have therefore been able to offer limited volumes for spot export transactions throughout the year.

There were also reports that a Chinese producer had closed a tender on July 31 involving 3,000 tons of Group I SN500 for late August loading, but it could not be ascertained whether the tender had been awarded.

Chinese buying interest has been sluggish given a seasonal slowdown in lubricant consumption amid ample inventories. Blenders remained cautious about fresh purchases because they believed Group I prices have climbed too much and may be coming down in the near future as more supplies were expected to enter the market.

However, plant turnarounds in Southeast Asia and Japan, together with permanent Group I plant closures were expected to keep deficient Group I levels in the region. As a result, imported bright stock prices were firm in China and availability was not anticipated to increase in the coming weeks. There were reports of importers looking at import options from faraway sources such as South America, but no transactions were reported concluded.

Group I demand has been somewhat dampened by reduced industrial and agricultural activity in China, particularly as the steep tariffs imposed on Chinese manufactured goods entering the U.S. have caused a slump in demand. There had been an uptick in the previous months as many U.S. importers and manufacturers had front-loaded products and raw materials ahead of the imposition of tariffs, but demand for some items has started to ebb. This situation was also expected to impact shipping activities, reducing demand for vessel space and opening up the possibility of fewer ships covering the China-U.S. route, which in turn could affect marine lubricant consumption and Group I base oil demand.

In India, Group I import prices were stable to firm again this week due to higher offers amid limited regional availability. Group I grades have seen increases of around $5/t-$10/t on a CFR India basis as producers have raised their offers. However, given the ongoing monsoon season, which dampens activity in many different economic sectors, and increasing domestic supplies, Indian buyers have been more reticent about securing imported product. There continued to be interest in Middle East-origin parcels,  but even prices for these cargoes have inched up. Some buyers preferred to secure Group II base oils whenever applications allowed for substitution as the price difference with the premium grades has contracted.

Group II

Group II prices diverged, with the light grades seeing fairly stable levels and the heavy grades losing ground on account of lengthening availability. There were reports of growing spot supplies being offered by South Korean and the sole Taiwanese Group II producer, although at least one South Korea supplier was heard to be requesting the co-loading of the Group II light grade 150N with the heavy grade 500N. A second supplier was understood to be offering these cuts for separate shipment.

The heavy-viscosity grades were under pressure in China due to lengthening supplies and expectations of additional availability from regional suppliers, as well as from domestic refiners in the coming weeks. Group II capacity has grown considerably in China over the last decade and most plants have now returned to production, infusing the market with product. Even the light grades, which seemed to be tighter in other countries, have become more abundant in China and domestic suppliers have therefore lowered offer levels.

In India, domestic Group II supplies have been able to meet a larger portion of demand than in previous years, reducing the need for imports, although India still depends on imported base oils to meet the growing demand for high-performance base oils used in automotive and other applications.

Import prices for the light grades have inched up by about $10/t on a CFR India basis week on week on tighter availability and firmer feedstock prices. Refiners were favoring the production of the heavy grades due to more advantageous margins, but the more plentiful supplies were starting to exert downward pressure on pricing. Imported heavy grade spot bids and offers were understood to have slipped by $10/t from the previous week.

There were expectations of U.S. spot cargoes becoming available in the coming weeks as supply levels have started to improve following a heavy turnaround schedule in that country, but U.S. market players also prefer to hold on to extra volumes during hurricane season in case of production disruptions due to severe weather. This would leave fewer spot cargoes available for export.

Group III

Regional availability of Group III base oils has improved, following the completion of turnarounds both at Asian and Middle East facilities. Demand in Europe and the U.S. – destinations which typically draw Group III cargoes from various sources given attractive prices – has softened due to summer holidays and the winding down of the peak driving season, freeing up more cargoes for buyers in other countries such as India.

In China, domestic producers continued to offer attractive prices compared to imports to gain or maintain market share. Competition has eased partly because domestic producers have been able to achieve the expected specifications on Group III grades and more buyers are happy to procure domestic Group III grades given pricing and simpler logistics.

Group III base oil prices were firm in India due to limited regional supplies against steady requirements. While Group III base oils do not attract as much buying interest as Group II grades, there is increased demand from automotive segments as a growing number of consumers prefer to use premium lubricants in newer car models. At the same time, the monsoon season also dampened auto sales and travel. Group III import prices were heard to have edged up by $5/t on a CFR India basis on account of a limited number of offers.

Shipping

• A 1,500-ton cargo was discussed for shipment from Onsan, South Korea, to Taichung, Taiwan, the first week of September.
• A 1,000-ton parcel was quoted for shipment from Onsan to Merak, Indonesia, in early August.
• A second 1,000-ton lot was mentioned for lifting in Onsan to Singapore in early August.
• A third 1,000-ton parcel was on the table for shipment from Onsan to Huizhou, China, the first week of September.
• About 1,000 tons were also expected to be shipped from Onsan to New Orleans/Houston, U.S., Aug. 1-11
• A 1,000-ton lot was also discussed for loading in Yeosu, South Korea, to Tianjin, China, in mid-August
• A 1,600-ton cargo was mentioned for shipment from Onsan to Zhangjiagang, China, between Aug. 10-12

Production

The global base oil supply and demand balance is likely to ease as a number of turnarounds will be completed and plants are expected to be restarted, although ongoing shutdowns at a few units, together with permanent closures over the last few years may continue to crimp supplies in some base oil segments. Turnarounds that took place earlier in the year are still listed below as they may have impacted base oil pricing at the time of completion and beyond.

Group I

• Thai Lube Base Oil’s Group I unit in Sriracha, Thailand, is shut for 45 days from mid-July to second half August.
• IRPC’s Group I plant in Thailand, offline for maintenance in May, has resumed operations with limited spot availability.
• In Japan, Group I supply remains tight after extended shutdowns at Idemitsu’s Chiba unit and Cosmo Oil’s Yokkaichi unit.
• Eneos completed maintenance at its Kainan (May–June) and Mizushima B (Feb–May) plants. Mizushima A is scheduled for maintenance in October.
• Two Eneos Group I plants were permanently closed in recent years.
• HPCL in India restarted its Group I unit in late April/early May following a partial shutdown.
• CPCL had a one-week maintenance at its Chennai Group I plant in April.
• PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure expected by July 2025. Inventory clearance is scheduled by end of August.
• CNPC’s Fushun plant in Liaoning is expected to increase Group I production to offset the Dalian closure. Bright stock capacity estimated at 60,000 t/y.
• Sinopec completed a two-month turnaround at its Gaoqiao Group I and II plant in May.
• Pertamina’s Group I plant in Cilacap, Indonesia, underwent maintenance from mid-January to late February/early March.

Group II

• GS Caltex completed a 45-day turnaround at its Group II/III unit in Yeosu (late February to May), with limited spot supply.
• Hyundai Oilbank Shell Base Oil cut run rates at its Daesan plant from March due to feedstock limitations; increased rates in late May.
• An unplanned outage at CNOOC’s Group II unit in Huizhou affected China’s Q2 availability.
• Sinopec’s Gaoqiao plant turnaround ended in May; its Jinan Group II unit was shut for a month in April.
• BPCL completed maintenance at its Group II plant in Mumbai in March.
• HPCL reportedly conducted a 45-day turnaround at its Group II trains in May (unconfirmed).
• Luberef shut down its Group I and II units in Yanbu, Saudi Arabia, for two weeks in Q2 for maintenance and catalyst change.
• Chevron restarted its Group II plant in Pascagoula, Mississippi, U.S., after a four-week turnaround in late May.
• Motiva restarted operations in June after a three-week turnaround at its Port Arthur, Texas, U.S., hydrocracker beginning in late May.

Group III

• SK Enmove completed a partial turnaround at its Ulsan Group III plant in late June; production on other trains continued.
• Adnoc shut its Group II/III plant in Ruwais, UAE, for two-three weeks in early May; operations have resumed.
• Bapco reportedly began a two-month turnaround and catalyst change at its Group III plant in Sitra, Bahrain, in May (not confirmed).

Prices

Crude

Crude oil futures were trading lower on Monday on news that the OPEC+ had agreed to increase production further in September. This would be the organization’s sixth consecutive month of output increases since April and came in response to the possibility that President Trump may impose a second round of tariffs if Russia does not agree to a ceasefire on Ukraine by August 8. The U.S. has also pressed India to stop importing crude from Russia.

• Brent October 2025 futures traded at $68.62 per barrel on August 4, slightly down from $69.07/bbl on July 28 (ICE Futures Europe).
• Dubai front-month crude futures (Platts) September 2025 settled at $69.74/bbl on August 1, up from $68.80/bbl for front-month futures on July 25 (CME).

Base Oils

Spot base oil prices were mixed, with some grades seeing downward revisions on lengthening supply, while others remained steady, or moved up slightly due to tighter conditions.

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

• Group I solvent neutral 150 was steady at $820/t-$860/t and the SN500 was holding at $1,080/t-$1,120/t. Bright stock prices were firm at $1,390-$1,430/t (all ex-tank Singapore).
• Group II 150N held at $850/t-$890/t, and the 500N was also unchanged from the previous week at $1,080/t-$1,120/t

FOB Asia

• Group I SN150 was stable at $690/t-$730/t, but the SN500 was down by $10/t at $910/t-$950/t; bright stock was firm at $1,280/t-$1,320/t.
• Group II 150N edged up by $10/t to $700/t-$740/t but the 500N was assessed $10/t lower at $900/t-$950/t.
• Group III 4 cSt was unchanged from the previous week at $1,100/t-$1,140/t, the 6 cSt was steady at $1,090/t-$1,130/t and the 8 cSt held at $970/t-$1,010/t (all FOB Asia) on muted trading.

Gabriela Wheeler can be reached at gabriela@LubesnGreases.com

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.