Asia Base Oil Price Report


The start of the spring season and the need to replenish inventories prompted many base oil buyers to return to the market in Asia, allowing for a fairly balanced supply and demand scenario. This condition lent stability to pricing despite volatile crude oil and feedstock values and a slight lengthening of some cuts as most refineries were running at close to full rates – with the exception of some units in China – and lingering economic uncertainties dampened lubricant buying interest.

While demand has definitely experienced an improvement in China, several base oil plants continued to run at reduced rates given overcapacity and a slump in demand during the height of the pandemic. Many new plants had just come on stream in 2019, a few months before the COVID-19 pandemic started. When the coronavirus struck, it triggered strict lockdowns, a stringent zero-COVID policy and a significant reduction in the population’s mobility and industrial output. Some experts speculated that the refinery run rates in China fell to 40% in some cases.

However, as the COVID restrictions have been lifted and there has been a revival of most economic sectors in China, an uptick in demand for base oils and lubricants was likely over the next few weeks. Activity in general was expected to improve in Asia during the second half of the year amid more stable economic conditions. This should also motivate importers to bring more cargoes into China, particularly of the heavy grades which are in deficit. For the time being, however, lower domestic prices represented a roadblock to imports of most heavy grades, particularly bright stock, despite price reductions by some sellers eager to conclude business.

There were reports that substantial API Group II cargoes from the sole Taiwanese producer had started to pour into China again, following several months of minimized shipments as demand had not been healthy, and the Taiwanese supplier had taken advantage of requirements in countries such as India instead.

Discussions of several South Korean cargoes reaching China in coming weeks were also heard, with about 4,000 metric tons made up of five grades expected to ship from Onsan to Nantong and Jingjiang in early April. A 2,200-ton parcel was mentioned for shipment from Onsan to Huizhou in mid-April. Additionally, almost 10,000 tons were on the table for lifting in Dumai, Indonesia, to Nantong and Ulsan in mid-April.

South Korean suppliers have also been very actively concluding business to various parts of Asia, with several cargoes expected to move to India and Southeast Asia. A 5,000-ton lot of two grades was expected to be shipped from Yeosu to Ho Chi Minh and Haiphong, Vietnam, and Tanjung Priok, Indonesia, for arrival between April 1 and April 20.  A second parcel was discussed for shipment from Yeosu to Singapore, Port Klang, Malaysia, and Tanjung Priok for second half April arrival. A 4,000-ton lot of three grades was expected to be shipped from Ulsan to Port Klang in April. A 3,000-ton parcel was also expected to be moved to Manila, Philippines, in the first week of April.

In other parts of Asia, consumers were aware that product availability was plentiful and did not expect shortages in the next few weeks, giving them the opportunity to evaluate offers before agreeing to any purchases. As a result, many buyers were delaying purchases as long as possible, leading to a slight lengthening of supply in some base oil categories. There were ample inventories of the Group III 8 centiStoke grade, for example, which placed downward pressure on pricing. At the same time, refiners have been running base oil plants at high rates given attractive premiums over diesel, which had previously been tighter and had commanded steeper prices. This contributed to plentiful supplies of most grades.

Demand for Group I in Indonesia, Thailand and India was steady and buyers were on the lookout for import cargoes, although domestic product was meeting a large part of the requirements in India. India had been able to import Group I grades from Iran in the past, but this trade route has been mostly defunct during the last few years, given international sanctions on Iranian exports and a shortage of some Iranian grades. Surprisingly this week, there was talk of a 15,000-ton Group I cargo for shipment from Paulsboro, New Jersey, in the United States, to Mumbai at the end of March or early April.

Additionally, it appears that a number of Group II cargoes might make their way from the U.S. to India in the coming weeks to alleviate a lengthening of supplies there. U.S. shipments to India had been commonplace in years past, but had dried up last year because of tight conditions and steep prices in the U.S. However, as a key U.S. producer was expected to complete a turnaround this month, more Group II volumes were anticipated to become available for export. About 15,000 tons were heard to have been already earmarked for shipment from the U.S. Gulf Coast to India in late March.

Furthermore, there could be some Group II tightening in Asia in the second quarter given the upcoming turnarounds at South Korean and Singaporean plants.

Reports also circulated of several Singaporean cargoes having been discussed for shipment both to India and China. A large Taiwanese cargo made up of several base oil grades was also heard to have reached Indian shores this week. About 6,000 metric tons were expected to be shipped from Ruwais, Qatar, to Mumbai in late March/early April. A large cargo of about 15,000 to 20,000 tons was discussed for shipment from Daesan or Pyongtaek, South Korea, to West Coast India in late April. A 5,000-ton to 9,000-ton lot was also quoted from Yeosu, South Korea, to Mumbai for April shipment. A 3,000-ton to 5,000-ton cargo was mentioned for shipment from Yeosu to Mumbai in second half March.

Spot base oil prices were mixed this week, with some grades showing stable pricing supported by balanced supply and demand, some of the heavier grades seeing upward adjustments on tighter conditions, and the Group III 8cSt edging down on lengthening supply. Bright stock was also adjusted down as sellers sought to conclude business. 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 were steady from the previous week. Spot prices for the Group I solvent neutral 150 grade were assessed at $920/t-$950/t, and the SN500 at $1,030/t-$1,070/t. Bright stock edged down by $10/t to $1,280/t-$1,320/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed at $970/t-$1,010/t, and the 500N remained at $1,020/t-$1,070/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was steady at $790/t-$830/t, but the SN500 edged up by $10/t to $860/t-$900/t. Bright stock prices were slightly down by $10/t at $1,060/t-1,100/t, FOB Asia.

The Group II 150N was assessed steady at $860/t-$900/t FOB Asia, and the 500N and 600N cuts climbed by $20/t to $910/t-$940/t, FOB Asia.

In the Group III segment, prices were stable to soft. The 4 cSt was unchanged at $1,520-$1,560/t, while the 6 cSt was holding at $1,490/t-$1,530/t, but the 8 cSt grade was adjusted down by $10/t to $1,200-1,240/t, FOB Asia, for fully approved product.

Upstream, crude oil futures slipped after the U.S. Federal Reserve announced an interest rate hike of a quarter point and there were expectations of more tightening to come. Futures had moved up in previous sessions as jitters triggered by bank failures had been tempered earlier this week when UBS agreed to buy its rival, the embattled Credit Suisse bank.

On March 23, Brent May futures were trading at $76.22 per barrel on the London-based ICE Futures Europe exchange, from $74.51/bbl on March 16.

Dubai front month crude oil (Platts) financial futures for April settled at $75.84 per barrel on the CME on March 22, compared to $72.14/bbl on March 15.

Gabriela Wheeler can be reached directly at 

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

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