Economic uncertainties and automotive industry-related changes continued to impact prospects for 2026. Base oil demand growth from the PCMO segment was expected to vary, depending on the country, with overall consumption in some nations expected to grow in the short term, while in others, particularly China, it was anticipated to decline in the long term due to vehicle electrification and longer oil drain intervals. The finished lubricants market in China is expected to experience a 10-year dip, with PCMO bearing the brunt of the demand drop.

India and Southeast Asia were more likely to remain strong drivers of demand due to a thriving automotive industry, rising vehicle ownership, and robust underlying economic growth. In Thailand, for example, PCMO consumption recently saw a significant rise, driven by activity in the services sector, while in Indonesia, the market is experiencing steady growth driven by a combination of factors including an expanding automotive sector, rapid industrialization, and significant infrastructure development across the country. Vietnam is projected to have the fastest growth in the Asia-Pacific automotive engine oils market, according to market reports. Base oil producers were looking for new opportunities in developing markets such as dielectric fluids for immersion cooling of data centers and in the heavy-duty and marine transportation segments.

Group I
Availability of API Group I base oils has grown more plentiful given waning demand, and this was exerting downward pressure on prices, even on the light grades and bright stock that had been largely immune to downward pressure earlier in the year.

Once again, most offers emerged from suppliers in Southeast Asia and Japan. However, buying interest was somewhat subdued as many buyers were holding adequate inventories and preferred to delay purchases to the new year.

A Thai producer has offered flexibag cargoes of Group I SN500 and bright stock. The latest assessments had placed the SN500 at around $950 per metric ton FCA Thailand and bright stock at $1,330/t FCA Thailand for January shipment.

It was heard that there were also small cargoes available from Indonesia. The latest offer for the SN130 grade was heard in the low $700s/ton ex-works Indonesia, and bright stock in the high $1,200s/t ex-works.

A plant turnaround at a base oils unit in Saudi Arabia spurred buying interest for Asian Group I cargoes in the Middle East, but the producer was anticipated to restart the plant before the end of the month, with additional spot supplies expected to be available in January 2026.

In China, domestic suppliers have raised Group I ex-tank prices given renewed buying interest in locally produced base oils as prices for imports were less attractive, even though distributors of imported material have lowered prices to incentivize orders as well, particularly for bright stock. Perhaps one of the biggest incentives for buyers was the fact that domestic supplies were readily available with shorter delivery times.

In India, domestic prices have edged down because of sluggish demand and plentiful availability. Many buyers preferred to secure domestic product to avoid logistical complications, while some were holding enough material to run day-to-day operations and did not need to secure additional volumes. Buying interest in imports was therefore muted, with imported SN500 and bright stock prices slipping by about $5/t on a CFR India basis on lower bids and offers, while prices for the SN150 were steady because of leaner availability.

Group II
Supplies in the Group II segment have tightened somewhat, with a couple of suppliers withholding spot offers of light grades as they prioritized contractual obligations. The heavy-viscosity cuts were still more readily available than the light grades and prices were exposed to downward pressure as a result. Due to seasonal patterns and the need for lighter viscosities, demand of the heavy cuts tends to subside in the colder months in some countries such as China. It was challenging for suppliers to place base oils in other regions as requirements have generally waned with the approach of the year-end holidays.

At the same time, data showed that exports from South Korea and Taiwan fell in November, which could point to either reduced production rates, or subdued buying interest in imports from these origins. In any case, the 500N grade was still surpassing the light grade in terms of availability, with a South Korean producer requiring buyers to lift the light grades in conjunction with the heavy cut, likely to rebalance its inventories. A second South Korean producer reportedly has small volumes of 500N and larger cargoes of the light grades at its disposal.

South Korean and Taiwanese material continued to flow to China to meet contractual requirements, but spot volumes were heard to have fallen because of weaker demand. Domestic availability of most grades was considered plentiful and domestic suppliers have revised prices down for the high viscosity grade. Activity was anticipated to remain fairly muted until consumers prepare inventories ahead of the Lunar New Year holidays in mid-February.

In India, ample supplies of the heavy grades placed downward pressure on pricing. Import prices for the 500N grade were heard to have slipped by approximately $5/ton on a CFR India basis week-on-week. On the other hand, import prices for the Group II 70N grade and 150N were reported as largely steady as these grades were less easily obtained, even though demand was also lackluster.

There were fewer U.S. Group II cargoes offered into India than anticipated, despite the fact that offers typically multiply at the end of the year as U.S. suppliers try to release extra barrels held during the hurricane season and operating rates remain high. However, this year, it appeared that U.S. producers were more focused on meeting product needs in Latin America, Europe and Africa. Difficulties making the arbitrage work as Asian cargoes were priced more competitively were also blamed for the smaller number of spot cargoes moving from the U.S.

In production news, national oil company Indian Oil Corp.’s Group II supply might be slightly reduced this month as the producer performed maintenance before the start-up of its expanded facilities. The producer was heard to have completed its Group III expansion work at the Haldia refinery, and started a turnaround on the Group II trains in November, but the producer has built inventories to cover contractual requirements during the outage.

Group III
Participants reported a more balanced supply and demand scenario in the Group III segment, although it was still not apparent whether this was the result of trimmed operating rates, or whether cargoes had moved to other regions, reducing the number of offers in Asia. Prices were generally steady, although values for the 8 cSt cut were still exposed to downward pressure given ample availability of this grade.

In China, domestic producers have maintained or gained market share because they had waged a price war against imports, offering attractive prices and the advantage of proximity and shorter lead times. A local supplier was keeping its 4 cSt grade steady given limited stocks and because it has attained the desired specifications. However, many contract customers have kept their regular foreign suppliers because of specifications issues and key approvals, along with long-term supply relationships.

Group III base oils were anticipated to remain under downward pressure in China both because of the ongoing competition between importers and local producers, and due to added domestic Group III capacity expected to come on-stream in the next couple of years. Additional coal-to-liquids capacity was expected to enter the supply system by 2027, along with increased polyalphaolefin (PAO) and naphthenic base oils production.

In India, ample availability of imported Group III grades and the prospect of increased domestic production as national oil company Indian Oil Corp. (IOC) has completed an expansion of its Group III plant in Haldia were placing downward pressure on prices. The refinery was heard to have shut down in November for maintenance on the existing Group II trains. It could not be ascertained whether the IOC product has attained the desired specifications as the refiner has not yet started commercial sales, according to sources.

Most Group III prices were reported within the published ranges in Asia, but at least one producer’s prices carried a premium because of its full approvals and ability to offer global supply from multiple production sites. The producer’s lowest prices for all grades were above the high end of the published FOB Asia ranges. The published ranges may be adjusted in the coming weeks pending further market input.

Shipping

• Approximately 10,000 metric tons-12,000 tons were likely to be shipped from Yeosu, South Korea, to Godau, Vietnam, in 1H Jan.
• A 3,600-metric ton cargo was discussed for shipment from Qatar to West Coast India between January 18-20.
• A second cargo of 6,300 tons was also mentioned to cover the same route, with the lifting expected between Jan. 21-22.
• A 4,500-ton lot was likely to be shipped from Mailiao, Taiwan, to Karachi, Pakistan, in early Jan.
• A 1,000-ton parcel was mentioned for shipment from Onsan, South Korea, to Singapore in late Dec.
• Around 3,000 tons were expected to be lifted in Onsan for Merak, Indonesia, between Dec. 20-30.

Production

The global base oil supply and demand balance has eased as a number of turnarounds have been completed and plants have been restarted, although reduced output 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

• Luberef (Saudi Aramco Base Oil Co.) has scheduled a 45-day turnaround at its plant in Yanbu, Saudi Arabia, from mid-November until December. The unit produces Group I, Group II and Group III base oils. The plant underwent an expansion in 2017. The company had shut down its plants in Yanbu and Jeddah for about a week in Q2 2025.
• Eneos completed maintenance at its Kainan (May–June) and Mizushima B (Feb–May) plants in Japan. Mizushima A underwent maintenance from October to November.
• Two Eneos Group I plants were permanently closed in recent years.
• Idemitsu’s Chiba unit completed a turnaround at the end of July/early August
• Chennai Petroleum completed a turnaround at its Group I plant in Chennai, India, in September/October for approximately one month.
• Thai Lube Base Oil’s Group I unit in Sriracha, Thailand, was shut for 45 days from mid-July to second half August.
• PetroChina’s Dalian refinery began a permanent shutdown in 2023. The base oils unit closed in late 2024, with full closure by July 2025. Inventory clearance was 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 is estimated at 60,000 t/y.
• IRPC’s Group I plant in Thailand was offline for maintenance in May
• HPCL in India restarted its Group I unit in late April/early May following a partial shutdown.
• Sinopec completed a two-month turnaround at its Gaoqiao Group I and II plant in May.
• CPCL had a one-week maintenance at its Chennai Group I plant in April.
• Pertamina’s Group I plant in Cilacap, Indonesia, underwent maintenance from mid-January to late February/early March.

Group II

• ExxonMobil has completed a capacity expansion at its Singapore Resid Upgrade Project and commenced on-spec production in August. The producer has started to offer an ultra-heavy Group II grade with similar characteristics to bright stock. The project is an upgrade of the company’s integrated manufacturing complex, which will allow it to expand large-scale production of its global EHC™ Group II slate and meet growing demand for high-performance lubricants in the Asia-Pacific region, the company said.
• Indian Oil Corp. was understood to have completed a one-month turnaround at its Group II plant in Haldia in November. The producer also completed an expansion of its Group III capacity in Haldia in December.
• Bharat Petroleum delayed a brief turnaround to October from earlier in the year, but there was no confirmation whether the plant had been shut down in October.
• Formosa Petrochemical has postponed a scheduled turnaround and catalyst change at its Mailiao, Taiwan, plant from the fourth quarter of 2025 to 2026.
• Hyundai Oilbank Shell Base Oils plans to shut down its plant in Daesan, South Korea, in April 2026 for approximately 45 days. The company had cut run rates in March for several weeks due to feedstock limitations, but increased rates in late May.
• BPCL completed maintenance at its Group II plant in Mumbai, India, in March, but there were reports of ongoing reduced output that was expected to last for several more months.
• HPCL reportedly conducted a 45-day turnaround at its Group II trains from May until July, following some delays.
• Excel Paralubes completed a scheduled turnaround at its Lake Charles, Louisiana, U.S. plant in October. The plant had been running at reduced rates for most of the year, limiting spot availabilities in the U.S.
• GS Caltex completed a 45-day turnaround at its Group II/III unit in Yeosu, South Korea, in late February to May, which had limited spot supply.
• 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.
• 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. However, some production issues lingered for several more weeks, reducing the producer’s Group II inventories.

Group III

• Indian Oil Corp. has completed an expansion of its Group III capacity in Haldia and a start-up of the expanded plant has been achieved this month.
• A fire at SK-Pertamina’s refinery in Dumai, Indonesia, broke out on October 1 but was quickly extinguished, with no impact to base oil supply reported. The Dumai Group III base oil plant was shut down for maintenance after the fire and has been restarted. Term supplies were not expected to be affected. Pertamina also operates a Group I plant in Cilacap, Indonesia. The Dumai refinery is a joint venture between Indonesian state-run Kilang Pertamina Internasional and South Korean producer SK Enmove.
• 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 or three weeks in early May.
• BAPCO began a turnaround and catalyst change at its Group III plant in Sitra, Bahrain, in May and completed it in late July.
• Hainan Handi had an extended shutdown at its plant in China, starting in mid-June.
• Sinopec restarted its Group III plant in Yanshan in late July.

Prices

Crude
Crude oil futures climbed on Monday morning after trading at multi-month low for several sessions on fears of an escalation in U.S.-Venezuela tensions and potential supply disruptions, as the U.S. Coast Guard seized a second oil tanker and intercepted a third one over the weekend.

• Brent February 2026 futures were trading at $61.02 per barrel on Dec. 22, slightly down from $61.43/bbl for front-month futures on Dec. 15 (ICE Futures Europe).
• Dubai crude futures (Platts) for January 2026 settled at $60.17/bbl on Dec. 19, down from $60.83/bbl for front-month futures on Dec. 12 (CME).

Base Oils
Spot base oil prices in Asia were largely steady to soft, with some of the heavy grades slipping due to weaker demand and growing supplies.

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
Group I solvent neutral 150 steady at $780/t-$820/t
SN500 down by $10/t at $920/t-$960/t
Bright stock prices held at $1,310-$1,350/t

Group II 150N steady at $820/t-$860/t
500N stabilized at $960/t-$1,000/t

FOB Asia
Group I SN150 down by $10/t at $670/t-$710/t
SN500 slipped by $10/t to $730/t-$770/t
Brght stock prices steady at $1,130/t-$1,170/t

Group II 150N assessed at $720/t-$760/t
500N unchanged at $780/t-$820/t, although continued to be exposed to downward pressure

Group III grades largely unchanged
4 cSt and 6 cSt assessed at $1,080/t-$1,120/t, and $1,050/t-$1,090/t, respectively
8 cSt held at $900/t-$940/t

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.