Indian base oils demand was described as steady, with imports from South Korea, Taiwan, Thailand and the Middle East, among other origins, together with domestic production covering most requirements. Buyers remained cautious in terms of pricing, however, as there were still uncertainties regarding price direction and whether prices would hold at current levels in the coming weeks. Consumers preferred not to keep pricey inventories if values were to come down later and did not feel pressured to accept import offers as there appeared to be plentiful supply of local products at competitive levels.

In China, the implementation of fresh lockdowns in many cities due to the government’s strict zero-COVID policy implementation – which even included trapping visitors at Disneyland in Shanghai for mandatory testing on Monday – has also led to more limited mobility of the population and an economic slowdown, which has impacted the country’s fuel and lubricants consumption.

Many Chinese consumers have been working down existing base oil inventories over the last several weeks, but have returned to the market, often seeking imports to fill the gap left by a lack of certain grades in the domestic market. Several Chinese base oil plants were heard to have cut back operating rates on tax inspection issues and softer base stock demand, and there were scheduled turnarounds as well. China also suffers from a structural deficit of heavy-viscosity grades, which prompted buyers to seek imports from various sources. It has been fortuitous that the sole Taiwanese API Group II producer has been able to offer additional export volumes to China since October, as the supplier’s run rates have increased after some production setbacks in the third quarter. Shipments from South Korea were also expected to arrive in China this month, with a 5,000-metric-ton cargo made up of seven grades expected to be lifted from Ulsan for Nantong, Taicang and Zhenjiang in mid-November. About 12,000 metric tons of five grades were also expected to be shipped from Singapore to Qingdao and Tianjin in mid-November, likely for intra-company consumption.

Buying interest for heavy grades was also apparent in Southeast Asia, especially since two Thai plants and a Japanese facility were in the midst of turnarounds and Group I availability has tightened. Some buyers opted for using Group II cuts to replace their Group I counterparts whenever possible as prices of the Group II grades were competitive given ample supplies in the region.

While export business in Asia had yielded deals into faraway destinations in the Americas a few weeks ago, it seemed that transactions have turned more regional. Several South Korean cargoes were heard to have been concluded into Southeast Asia, including a 2,000-metric ton lot from Yeosu to Manila, Philippines, in early December. There was also mention of a 6,000-10,000- metric-ton cargo moving from Malacca to Port Klang, both in Malaysia, in early November. A 1,000-metric-ton lot was on the table for shipment from Rayong, Thailand, to Haiphong, Vietnam, the first week of November. A second 1,000-metric-ton parcel was expected to be shipped from Ulsan to Singapore in the second half of November.

The ready availability of most base oil grades had exerted downward pressure on spot prices over the last several weeks, but the supply and demand ratio appeared to have attained a more balanced position and prices have therefore stabilized. Rising crude oil and feedstock prices over the week were also lending a more bullish sentiment to the market.

Crude oil futures rose on Wednesday, boosted by another decline in U.S. crude inventories as refining run rates increased ahead of the winter heating season. There were also expectations that oil supply would tighten in coming months due to sanctions on Russian exports and OPEC+-mandated production cuts.

On Nov. 3, Brent January 2023 futures were trading at $94.89 per barrel on the London-based ICE Futures Europe exchange, from $96.91/bbl for December 2022 futures on Oct. 27.

Dubai front month crude oil (Platts) financial futures for December settled at $89.60 per barrel on the CME on Nov. 2, compared to $90.92 for November futures on Oct. 26.

Asian spot base oil prices were assessed as largely steady from the previous week. The 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 prices were unchanged week on week. Spot prices for the Group I solvent neutral 150 grade were heard at $980/t-$1,010/t, and the SN500 was holding at $1,100/t-$1,140/t. Bright stock was assessed at $1,240/t-$1,280/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were heard at $1,090/t-$1,130/t, while the 500N was hovering at $1,120/t-$1,160/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was gauged at $830/t-$870/t, and the SN500 at $900/t-$940/t. Bright stock prices were steady at $970/t-1,020/t, FOB Asia.

The Group II 150N was assessed at $880/t-$920/t FOB Asia this week, and the 500N and 600N cuts were holding at $920/t-$970/t, FOB Asia.

In the Group III segment, prices showed little change, with demand and tight supply offering support to current indications, particularly for the 4 centiStoke grade. The 4 cSt was holding at $1,530-$1,570/t, and the 6 cSt was heard at $1,490/t-$1,530/t. The 8 cSt grade was also steady at $1,210-1,250/t, FOB Asia, for fully approved product.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com. 

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

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.