The suppliers have come back from the holidays and are eager to make sales, a buyer said, pointing out that supply appeared to be plentiful but prices mixed and slightly confusing, depending on the origin of product. Given the ready availability of most grades, buyers felt they had some leverage in negotiation.

Buyers in Taiwan have received offers from Southeast Asian suppliers for late February shipments in the realm of $20-30/ton higher than January numbers.

At the same time, Taiwanese suppliers were offering February cargoes at prices that were similar to January when calculated in U.S. dollars but higher when quoted in Taiwan New Dollars. Recent exchange rate fluctuations lowered the TWDs value relative to the greenback.

Low-viscosity API Group I grades are not available from the local producer as its low-vis production train remains offline, sources said, so buyers have no choice but to tap imports.

Consumers were generally hesitant about how much product to secure as it was not yet clear whether demand from downstream applications would strengthen or remain flat. A couple blenders said they had not yet seen signs of strong requirements from the automotive and industrial segments but that conditions could change in the next few weeks.

A supplier concurred and added that conditions had not fluctuated much since the end of the year. This individual added, though, that because the peak lubricant production season of spring typically causes base oil demand to flourish between March and May, it would not be surprising to see strong requirements emerge in coming days.

Base oil producers have been anxious to achieve price increases to improve margins – which continue to be pressured by high crude oil and feedstock costs – and this might be the right time to pursue price hikes, sources said. But with ample availability and some segments oversupplied, increases are difficult to implement. With the exception of one or two turnarounds scheduled toward the end of the year, there will not be many plant outages this year, which exacerbates the oversupply situation. As a result, a few producers are mulling the possibility of cutting production in coming months.

At the same time, consumers inventories have been run down because many buyers stayed away from the market in the weeks leading to the holidays. There will be a need to restock ahead of the busy spring season. In particular, the high viscosity grades will be in high demand, suppliers said.

Buyers in China were expected to be the leaders in terms of restocking, with base oil consumption anticipated to increase significantly over the next few weeks. Northeast Asian producers said that buying appetite in China was starting to improve, and there was especially strong interest for the high-viscosity grades. One of the suppliers said it had finalized all of its Group II sales for February shipments under term contracts and that it had no extra availability for spot deals.

Reduced domestic base oil production in China could drive buyers to accept higher offers for imports. According to sources, Sinopec Shanghai Gaoqiao shut down its Group II base oil plant a week ago, and production problems were reported at other Sinopec facilities, but details remained elusive. Sinopecs base oil plants in Jingmen and Henan appeared to be running well.

While concluded business was still fairly thin this week, the assessed price ranges have been adjusted up to reflect not only deals, but also bids and offers. Group I solvent neutral 150 was heard at $930-$990/t, SN500 at $1,030-$1,070/t, and bright stock at $1,120-$1,180/t, all FOB Asia, reflecting a $10-20/ton increase on higher buying and selling indications.

Prices for Group II material were also $10-20/ton steeper at $990-$1,060/t FOB Asia for 150 neutral, and at $1,060-$1,130/t FOB Asia for 500N.

In the Group III segment, prices were stable to firm, with transactions being concluded close to the high end of the prevailing ranges. The 4 and 6 centiStoke oils were reported at $1,030-$1,060/t FOB Asia, and the 8 cSt grade assessed at $1,020-$1,050/t FOB Asia, revealing a $10/ton increase at the low end of the spreads.

There was quite a bit of activity in the shipping market this week, with a 3,000-ton cargo of 600N being discussed ex-Ulsan or Yeosu, South Korea, to Nantong, China, for February 20-25 lifting. A 1,000-ton lot was expected to cover Ulsan or Yeosu to Tianjin, China, in the second half of February. A 2,000-ton cargo was still on the table for Mizushima, Japan, to Manila, Philippines, at the end of February or early March. A 2,000-ton lot was quoted for Karachi, Pakistan, to Hamriyah, United Arab Emirates, on March 15-17.

In the Middle East, an 800-ton parcel was on the table for Sharjah, U.A.E., to Chennai, India, on the next available vessel, while a second cargo made up of 3,000 tons of base oils was expected to be shipped from Sharjah to Mombasa, Kenya, under the same conditions.

Upstream, March ICE Brent Singapore futures were trading at $109.10 per barrel during the Asian trading day on Feb. 17, compared with $109/bbl on Feb. 10.

Gabriela Wheeler, based in Japan, can be reached directly at Gabriela@Lubesngreases.com