Towards the end of the second quarter of 2024, the Gear Oil prices-maintained stability in the Asian market and remained the same as observed in May 2024. The Gear Oil inventories are steadily dwindling as end-user industries increase their consumption, leading to stagnant prices in the domestic market.

Previously, Gear Oil prices have risen by 1% due to increased upstream base oil costs and higher demand globally amid the tighter availability of specific Gear Oil grades in the Asian region. There were indications that some sectors began to slow down, stemming from a growing awareness among consumers about extended supply conditions, which exerted downward pressure on prices. Gear Oil costs remained unchanged, and EP Gear Lube Oil FOB Jurong in Singapore witnessed USD 8380/MT at the end of June 2024, according to the ChemAnalyst data sources.

At the same time, the previous shortage of Gear Oil has prompted an uptick in exports from Singapore to other parts of Asia, driven by heightened purchasing activities and inadequate supply. To address the shortfall in reserves, major firms have escalated their production rates to meet the escalating market demand. In the upstream market, buyers have adopted a cautious approach and secured only the necessary volumes for day-to-day operations. This strategy aims to avoid stockpiling excess products that could potentially lose value soon. In countries like India, consumers have begun stockpiling inventories in anticipation of the monsoon season, which typically brings heavy rains and logistical disruptions. Similarly, in China, economic activity is expected to pick up following the Labour Day holidays, prompting preparations to meet anticipated demand surges. Overall, these strategic adjustments reflect a proactive response to current supply constraints and anticipated market fluctuations, highlighting the dynamic nature of the Gear Oil market in Asia amidst varying regional conditions and economic factors.

Simultaneously, other grades of Gear Oil have managed to maintain a balanced equilibrium in certain countries, and consumers have actively ramped up their inventories in anticipation of potential disruptions in supply chains and transportation networks. This proactive stockpiling aims to mitigate risks and ensure continuous supply amid uncertain market conditions. On the other hand, in several nations, buyers have taken a more cautious approach, opting to procure only essential quantities necessary for their day-to-day operations. This stance is driven by concerns over lower crude oil prices, which continue to exert downward pressure on the costs of base stocks utilized in the production of Gear Oil. This economic backdrop has influenced decision-making among consumers, prompting them to prioritize operational continuity while managing procurement risks associated with fluctuating market dynamics. Overall, the dynamic interplay between supply constraints, stable pricing for some grades, and varied consumer behaviour underscores the complex landscape of the Gear Oil market in Asia.

As per the estimation, the Gear Oil prices would surge in the Asian market at the beginning of Q3 of 2024. The suppliers may increase the accumulation activities. The production costs of Gear Oil may also increase with the anticipated increases in the prices of feedstock Base Oil, a primary feedstock for the lubricant market.