The base oil prices in China have continued to remain stable at the beginning of March 2025 despite the tight spot availability. While the group II base oil supply had seemed quite adequate, another group's supplies were tight which somewhat balanced the pricing structure. Moreover, a decline in the feedstock crude oil prices has lowered the manufacturing costs and offset the significant upward pressure during this timeframe.

Key Takeaways:

• Base oil prices remained stable despite scheduled turnaround due to offsetting factors.
• A surge in base oil prices was expected in the latter part of the month due to upcoming turnarounds.
• The downstream lubricant and automotive demand were low, yet due to further surges, market players have secured base oil volumes.
• The decline in feedstock crude oil prices has lowered the manufacturing costs and offset the upward pressure.

As per ChemAnalyst, the base oil prices in the following week of March 2025 are expected to surge due to upcoming turnarounds. In the upcoming months, a series of permanent facility closures and maintenance programs will decrease availability, potentially straining the global base oil supply and demand balance.

As March 2025 begins, the base oil prices in China have continued to remain stable due to a balance between supply and demand dynamics.

Group II availability, surprisingly, was quite decent. However, scheduled maintenance was squeezing the supply for another base oil group. An unplanned outage at the CNOOC Group II unit in Huizhou impacted domestic availability. And to add fuel to the fire, Sinopec has a two-month turnaround scheduled at its Gaoqiao plant, starting in March. Both Group I and Group II have tightened the spot availability.

While the downstream lubricant demand was not expected to rise until early March 2025. However, the perception of a shortage has created this artificial demand amid buyers rushing to secure their cargoes before the prices could skyrocket.

Moreover, China's new energy vehicle sales were on a downward trend. The post-holiday slump, the Chinese New Year, and consumer concerns about the NEV range in cold weather have lowered the downstream automotive sales in February 2025 as compared to January 2025. Less car production, less demand for lubricants, and ultimately, less demand for base oil.

However, some Chinese buyers were stepping up, securing volumes and building up inventories to meet their term obligations with more caution. Consumers were seeing those higher offer levels for April cargoes, but consumers were also taking the decline in the feedstock crude oil prices which created a cautious buying environment.

Henceforth, a decline in the feedstock crude oil prices has lowered the manufacturing cost and offset the upward pressure which made manufacturers offer a rollover strategy.