Steady demand and adequate availability of most base oil grades supported generally stable spot pricing in Asia. Both buyers and sellers were keeping an eye on crude oil and feedstock prices, as higher values would impact base oil prices in the weeks ahead. A majority of April business has been finalized, and participants were already working on May and early June cargoes, but some buyers were holding off on purchases as they waited for a clearer price direction.
While most prices were relatively unchanged from the previous week because conditions have been quite stable, there were some grades that have come under downward pressure as demand has slowed down and supplies have started to mount. Within the API Group I category, bright stock was experiencing more sluggish consumption than other grades, partly because both buyers’ and suppliers’ inventories were plentiful, particularly in Southeast Asia. This was perhaps the result of a slowdown during the observance of the Muslim holy month of Ramadan from March 22 to April 20 in a number of countries of the region.
Furthermore, the return to production of a couple of base oil plants also contributed to a lengthening of availability and placed downward pressure on prices. There has also been an increased inflow of base oils from Singapore to Indonesia in recent weeks, as well as higher volumes of Japanese products moving to Singapore.
Increased buying appetite in the key market India offset the lackluster interest in imports observed in another dominant market, China. It appears that buyers in India have returned to the trading scene in full force on expectations that supply will tighten and prices may firm in coming weeks given steep crude oil prices and upcoming turnarounds at various base oil plants. For the time being, Indian base oil price indications remained steady.
Firm retail diesel prices were also boosting the appetite for light viscosity base oil imports into India. Current diesel prices also incentivized refiners to maintain high operating rates, with Indian refiners still benefitting from discounted Russian oil imports.
Numerous export cargoes had been concluded to India in the previous weeks, but not quite as many parcels were being discussed this week. There was talk of a couple of cargoes originating in China having been acquired at competitive prices and expected to reach India in the first part of April, and several South Korean and Middle Eastern cargoes were scheduled to arrive in late April and early May. A large U.S. cargo of 16,000 tons made up of three grades was also quoted for shipment from Houston to Mumbai in early May.
| Chinese demand for imports has been lackluster, given that domestic supply seemed adequate to cover most product requirements, and base oil volumes shipped from Taiwan and South Korea have decreased. Nevertheless, reports of a stronger-than-expected economic recovery in China fueled expectations of potentially higher base oil and lubricants demand in the next few months. China’s economy expanded 4.5% from January through March, compared to the same period in 2022, showing a faster pace than expected after the government lifted its “zero Covid” restrictions, The New York Times reported. |
A number of plant turnarounds in China and ongoing reduced operating rates at some refineries were also expected to lead importers to look for opportunities to move products to China.
The Group III segment remained well-supplied for the time being, but upcoming turnarounds of Group III facilities in South Korea could constrain spot supply in the second quarter. An Indonesian Group III plant was heard to be restarting operations later this month, following a fire that occurred in the first week of April.
Spot supply from South Korea appeared to have contracted already and fewer cargoes were on offer during the week. Nevertheless, some negotiations were said to be ongoing, with a 1,800-ton lot of two grades mentioned for possible shipment from Onsan to Bangkok, Thailand, in late May. Another 2,000 tons were on the table for shipment from Onsan to Taichung, Taiwan, in late May as well. A 2,200-ton parcel was quoted for lifting in Yeosu and delivery in Haiphong, Vietnam, in early June. About 5,700 tons were also discussed for shipment from Yeosu to Dong Nai, Vietnam, Singapore and Port Klang, Malaysia, in late May.
Spot base oil prices in Asia were mostly stable, although prices for Group I bright stock experienced small downward adjustments due to reduced demand and plentiful supply. 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 to softer from the previous week. Spot prices for the Group I solvent neutral 150 grade were unchanged at $920/t-$950/t, and the SN500 at $1,030/t-$1,070/t. Bright stock was lower by $10/t at $1,270/t-$1,310/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 $1,040/t-$1,090/t, ex-tank Singapore.
On an FOB Asia basis, Group I SN150 was mentioned within a $770/t-$810/t range, and the SN500 was holding at $870/t-$910/t. Bright stock prices were adjusted down by $10/t to $1,010/t-1,050/t, FOB Asia.
The Group II 150N was stable at $870/t-$910/t FOB Asia, and the 500N and 600N cuts were unchanged from the previous week at $930/t-$970/t, FOB Asia.
In the Group III segment, prices were stable. The 4 centiStoke was unchanged at $1,520-$1,560/t, while the 6 cSt was assessed at $1,490/t-$1,530/t. The 8 cSt grade was heard near $1,170-1,210/t, FOB Asia, for fully approved product.
Upstream, crude oil futures fell to their lowest level in three weeks on Thursday, extending a downward streak that started earlier in the week, on a firmer dollar and expectations that a rate hike by the U.S. Federal Reserve would reduce oil demand. West Texas Intermediate futures slumped despite reports that showed a drop in U.S. crude stocks.
On April 20, Brent June futures were trading at $81.77 per barrel on the London-based ICE Futures Europe exchange, from $87.09/bbl on April 13.
Dubai front month crude oil (Platts) financial futures for May settled at $82.37 per barrel on the CME on April 19, compared to $86.45/bbl for April futures on April 12.
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.
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