Asia Base Oil Price Report


Trading was expected to perk up in coming days as participants returned to work following the New Year’s holidays, although activity levels were anticipated to be less vibrant than during the same period in pre-pandemic years due to the COVID-related issues affecting the key market China, along with economic uncertainties and renewed concerns about a potential global recession.

A spike in coronavirus infections in China after the government suddenly abandoned its zero-COVID policies has led to the absence of many factory workers and a slowdown in economic activity, as well as transportation and logistical issues. This was evident in a lower manufacturing index in December. Base oil production has also been dialed down at several domestic base oil plants in response to reduced consumption and a slowdown in lubricant segments.

Nevertheless, market observers maintained a bullish outlook for Chinese demand in 2023 and expected requirements to improve following the Lunar New Year holidays in late January. If this is the case, then supply in Asia may see a tightening during the last part of the first quarter, when a couple of plant turnarounds were also anticipated to take place in the region.

In India, demand has been fairly lackluster over the last few weeks as buyers witnessed the downward trend in pricing and expected values to remain under downward pressure, particularly as crude oil and feedstock prices have also edged down. However, diesel values kept their premiums in relation to crude and this might impact light base oil production as refiners might favor distillates output or blend base oils into the diesel stream.

Domestic base oil supplies were deemed ample to cover a large portion of requirements, with Indian producers adjusting prices to compete against imports. There were expectations that several cargoes would be reaching Indian shores in the next few weeks, with parcels booked from the Middle East, Southeast Asia, the United States and South Korea. About 17,000 metric tons were heard to have been booked from Lake Charles, United States, to Mumbai in early December. A 2,000-ton lot was discussed for shipment from Rayong, Thailand, to West Coast India or the United Arab Emirates in late Jan. A second 5,000-ton parcel was quoted to be lifted in Thailand for Jebel Ali, Dubai, United Arab Emirates or West Coast India at the end of January or early February. A 6,000-ton cargo made up of two to three grades was on the table for shipment from Ruwais, United Arab Emirates, to Mumbai and/or Hazira in late January.

One factor that may draw some attention in 2023 is that further API Group I capacity is scheduled to be shuttered in Japan, which is likely to result in a tighter API Group I supply and demand ratio in the region. This situation will likely lead to more imports moving into Asia from other regions if Southeast Asian production does not meet demand, or there will be increased substitution with Group II grades whenever applications allow. One grade that is more difficult to replace is Group I bright stock, which is already in short supply in countries like China, helping boost prices throughout 2022.

Another factor to keep an eye on will be the European Union ban on Russian refined products imports, which includes base oils. This may lead to increased interest in Asian base stocks.

In terms of exports from Southeast Asia, this week over 6,000 metric tons were mentioned for lifting in Singapore to Godau, Nhabe and Dongnai, Vietnam, in the first half of January. A 3,000-ton cargo was on the table for shipment from Singapore to Yokohama, Japan, in mid Jan.

The freezing winter storm that affected travel and refinery operations in large parts of the United States last week appeared to have had a more limited impact on base oil production than expected, although market players were just resuming work after the holidays and the full effect had not been assessed yet. At least three refineries that house base oil plants were heard to have been affected either by the frigid temperatures, which caused utility outages, or forced to shut down as a precautionary measure. Most plants were heard to have been restarted, however. The output disruptions might exacerbate a tightening of base oil supplies later in the first quarter, when a number of plant turnarounds were scheduled to take place on the U.S. Gulf Coast.

Market participants were also watching crude oil prices closely, as numbers have shown sharp fluctuations in recent days. Oil futures plunged by more than $4 per barrel on Wednesday, reflecting the biggest percentage loss in the first two trading days of any year for over 30 years, Reuters reported, as analysts voiced worries about fuel demand due to a global economic slowdown. Additionally, COVID-19 cases continued to multiply in China, the world’s second largest crude consumer, which might lead to a further lengthening of oil supplies.

On Jan. 4, Brent March 2023 futures were trading at $78.62 per barrel on the London-based ICE Futures Europe exchange, from $83/bbl for February futures on Dec. 29.

Dubai front month crude oil (Platts) financial futures for February settled at $73.50 per barrel on the CME on Jan. 3, compared to $79.45/bbl for January futures on Dec. 28.

Spot base oil prices in Asia were assessed as steady to softer from the previous week as supply has lengthened, but trading was thin and few transactions took place. Business was expected to pick up over the next few days, allowing for more comprehensive price assessments. The price 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 held steady week on week. Spot prices for the Group I solvent neutral 150 grade were unchanged at $940/t-$970/t, and the SN500 was holding at $1,050/t-$1,090/t. Bright stock was hovering at $1,230/t-$1,270/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed at $1,010/t-$1,050/t, and the 500N at $1,050/t-$1,100/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged at $810/t-$850/t, and the SN500 at $830/t-$870/t. Bright stock prices were hovering at $990/t-1,040/t, FOB Asia.

The Group II 150N was assessed at $820/t-$860/t FOB Asia, and the 500N and 600N cuts were down by $10/t at $840/t-$870/t, FOB Asia.

In the Group III segment, prices were stable. The 4 centiStoke was assessed at $1,520-$1,560/t, and the 6 cSt was holding at $1,490/t-$1,530/t. The 8 cSt grade was unchanged at $1,210-1,250/t, FOB Asia, for fully approved product.

Gabriela Wheeler can be reached directly at 

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:

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

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