Base oil suppliers in Asia are striving to achieve moderate price increases for May shipments given a slight tightening of the supply/demand ratio as a result of ongoing and upcoming plant turnarounds.
At the same time, the number of spot transactions concluded during the week was limited due to the fact that some suppliers did not have any spot tonnage to offer, as they were focusing on fulfilling contract commitments.
A few producers are targeting increases of $10-$30 per metric ton, depending on the destination and the product, for May transactions, and hope to achieve increases for June shipments as well, although negotiations have not started yet.
Buyers who purchase product from a major Singapore-based refiner said that May shipments reflected the increases proposed by the supplier for its API Group I and II base oils. The producer raised its ex-tank Singapore term prices by $30/t, with the exception of SN150, on May 2, according to buyers.
Other suppliers have also made overtures toward achieving higher prices in May. A Northeast Asian producer is targeting $15-$25/t increases for shipments of its Group II and III grades to Taiwan and China, with the exception of its 60N and 70N cuts, which would remain steady. The increases were expected to be supported by a tightening of supplies given a current turnaround at the producers base oils facility. While the supplier is striving to meet contract obligations in full, in some cases, slight reductions in volumes were agreed with customers back in February and March for April/May shipments. The supplier expects to resume full production and have improved spot availability in June.
Increases for shipments to Southeast Asia were anticipated to be at least $30/t, but in some cases, a hike of up to $50/t will be sought, the supplier said. The price of Group II and III cuts moving into India was also expected to be lifted by $10-$15/t in May.
A second Northeast Asian Group II producer said that it expects May spot prices to remain fairly steady, but anticipates possible increases in June. The supplier has no spot availability because of a planned turnaround that will begin in August and the need to start building inventories. The producer said it had received several inquiries for spot cargoes from China, but had not been able to entertain fresh spot opportunities.
However, some suppliers also conceded that contract orders from Chinese customers had decreased by about 10-20 percent so far in May compared to April. While domestic prices in China are under downward pressure, import prices have been fairly steady over the last couple of weeks, according to market players.
Meanwhile, in India, suppliers were hoping that demand would pick up in May ahead of the start of the monsoon season in June. Buying interest in April was characterized as steady, but not overly strong, with import prices showing little fluctuation during the last several weeks.
A local supplier in India has raised its prices for domestic Group I base oils, effective May 1. The increases were anticipated to be accepted because availability of Group I imported material was tight, making buyers turn to local supply, market players said. However, market observers also said that an increase in imported volumes may be seen in coming weeks, with product mainly expected to originate in Northeast Asia, the United States and the Middle East.
Current price indications in Asia for Group I material on an ex-tank Singapore basis are generally mentioned at $1010-$1050/t for SN150, $1080-$1160/t for SN500 and $1160-$1240/t for bright stock.
On an FOB Asia basis, prices are hovering at $930-$960/t for SN150, $1000-$1040/t for SN500 and $1090-$1130/t for bright stock.
Regarding Group II material, prices are assessed at around $950-$1020/t FOB NE Asia for 150N and at $1030-$1100/t FOB NE Asia for 500N, according to sources.
Group III spot prices are heard at around $1,000-$1,050/t FOB Asia for 4 cSt, 6 cSt and 8 cSt cuts, although some indications are mentioned at above $1,100/t FOB Asia for small-volume transactions.
On the shipping front, an inquiry to move 2,500 metric tons of lubes from Yokkaichi to South China June 23-27 was noted. A 2,800 ton cargo was also heard on the market to cover Ulsan or Yeosu to Jeddah in May, while a second 1,000 ton cargo was also seen for Ulsan or Yeosu to Gebze. Traders were also looking at moving 1,000 tons from Mailiao to Ho Chi Minh May 20-30, while a combined cargo of 6,000-6,500 tons of two or three grades was being discussed to cover Mailiao to Mumbai for loading June 10-20.
Several base oils plants are currently undergoing turnarounds or will be completing maintenance programs in the next few months.
Koreas S-Oil has taken its 500,000 tons per year Group III plant in Onsan off-line for a scheduled 40-day turnaround, which commenced April 14.
In China, Sinopec Jinan was expected to restart its 150,000 t/y Group II plant in Shandong in early May, following a maintenance shutdown which started on March 15.
Sinopec Yanshans 300,000 t/y Group I plant in Beijing was taken off-line on April 20 for a 35-day turnaround.
Chinese Petroleum Corporation is preparing to shut down its 250,000 t/y Group I plant in Kaohsiung, Taiwan, for maintenance in June, while Formosa will be shutting down its 600,000 t/y Group II plant in Mailiao for 60 days, starting in August.
Upstream, June Brent settled at $102.82/bbl on May 13, compared to $104.40/bbl on May 7.
In other news, Asian stock markets showed gains for a second day on Tuesday, May 14, after data showed that U.S. consumers had increased their retail spending last month. A jump in Japanese utilities also offset a slide in Chinese stocks during the day.
Gabriela Wheeler, based in Japan, can be reached directly at gabriela@lngpublishing.com.