The base oil market has entered a structural substitution inflection point: East China’s mainstream Group I base oil refinery utilization has slipped — the lowest in 18 months — driven by synchronized crude distillation unit turnarounds and declining LCO yield from FCC units. The day’s fuel oil futures at ¥4,529/t (+2.00%) reflect not demand strength but refinery rationing: high-sulfur feedstock processing losses have forced cuts in LCO output — the core blending component for Group I base oils — thereby raising marginal production costs. With Brent at $110.122/bbl and USD/CNY at 6.6929, landed duty-paid cost for Korean SK, Taiwanese CPC, and Singapore-based ExxonMobil Group II+ imports is substantially below the domestic East China Group I benchmark — supporting import substitution. This spread has widened meaningfully, triggering bulk procurement shifts by bonded-zone lubricant blenders. Concurrently, asphalt’s -1.13% decline confirms weak road-oil demand, further eroding refiners’ incentive to process low-margin heavy fractions. For SNSUC clients: ① The import arbitrage window remains open until Oct 25 (Brent sustained below $101.50 will compress margins); ② Offshore blending orders to Vietnam/Thailand can lock in ¥3,650–3,720/t landed cost; ③ Rejecting domestic Group I long-term price hikes is now fully justified. Clear view: bullish on import substitution pace. Key reversal triggers: Brent sustained below $101.50 or East China utilization rebounds significantly.