Asia Base Oil Price Report


Base oil market participants were keeping a watchful eye on crude oil and feedstock prices, as rising values were exerting pressure on base oils, but also influenced refinery operations. Some refiners favored the production of gasoil and other distillates over base oils because margins were more attractive, and demand was strong. Reduced plant operating rates and ongoing turnarounds contributed to a tightening of base oil supplies, providing additional support to increased price ideas.

Aside from reduced output, revitalized buying interest in Southeast Asia and India was expected to lead to a drawdown of current producer inventories, which was seen as a good sign as consumption levels have been rather lackluster over the last three months. However, availability of certain grades such as the API Group I cuts has tightened, and this situation was not expected to change soon. Discussions related to Group I and Group II shipments have intensified, but limited spot availability curbed the amount of business that managed to be concluded.

There has been heightened buying interest for imports in Southeast Asia, with several cargoes having been finalized to Vietnam, the Philippines, Indonesia and Singapore, while domestic demand in Thailand and Indonesia was also said to have shown an uptick. Malaysian exports involving Group III grades and Thai Group I cuts were mentioned for shipment to Southeast Asian and Middle Eastern destinations. A 5,000-ton lot was discussed for loading in Rayong, Thailand, to Hamriyah or Ras Al Khaimah, United Arab Emirates, in late October. A 1,000-metric ton cargo was quoted for shipment from Onsan, South Korea, to Ho Chi Minh, Vietnam, the first week of October. A 1,000-ton lot was expected to be shipped from Onsan to Merak, Indonesia, in late Sep. A 1,370-ton cargo was quoted for prompt shipment from Singapore to Godau, Vietnam. About 2,000 tons to 3,000 tons were on the table for lifting in Malacca, Malaysia, or Dumai, Indonesia, to Zhenjiang, China, in the first half of October.

Group I supplies in Thailand were heard to be strained as domestic demand was healthy and exports have been robust, and an extended Group I plant turnaround in Japan curbed availabilities in the region further.

Japanese producer Eneos has scheduled an extended turnaround at its Mizushima-A Group I plant, starting in early September. The program was expected to last three months.

Eneos has also planned the permanent closure of its Wakayama refinery, which produces Group I base oils, by October of this year, following the permanent shutdown of the company’s Negishi CDU 1 and Group I base oils plant in October of 2022.

Group II availability has also tightened in the region, and the return to production of a South Korean unit was not expected to bring much immediate relief. The Hyundai and Shell Base Oil Co. Group II plant in Daesan was heard to have resumed production last week after completing a turnaround, but operating rates might be trimmed as the refiner plans to increase production of distillates. A fire at the associated refinery had limited the supply of feedstocks as well.

Formosa Petrochemical, the only Taiwanese Group II producer, was expected to shut down its plant in Mailiao for a two-month turnaround in October. The producer has been building inventories to cover term requirements during the outage and has limited its spot sales in the region and its shipments to China. Taiwan also often exports Group II base oils to India.

In India, Bharat Petroleum was understood to have scheduled a turnaround at its refinery in Mumbai this month which will result in a partial shutdown of the base oils plant, affecting Group II production.

Some buyers have returned to the market in India to replenish stocks ahead of an expected uptick in finished products demand in a few weeks, when India prepares to celebrate Diwali, the biggest festival of the year, which is celebrated in early November. Base oil requirements had also been dampened by the monsoon rains, but the season wraps up in September and blenders expected improved lubricant demand. This situation received additional impetus from optimistic prospects for India’s economic growth, which should support increased industrial activity and heightened demand for industrial lubricants.

While Indian buyers resisted the higher spot offers that surfaced during the week and preferred to rely more heavily on contract volumes and domestic supplies instead, suppliers stood by their offers and were not willing to adjust prices down. Interest in light viscosity grades to be used as fuel extenders remained firm. High gasoil prices offered support to steeper base oil price expectations, with CFR India indications for Group I and Group II availabilities climbing between $15 per metric ton to $25/t week on week.

A number of cargoes were heard discussed for shipment to India, including about 3,500 metric tons to be lifted in Ulsan, South Korea, in the first half of October, as well as a 1,500-ton lot from Ulsan to Mumbai in mid Oct. About 7,000 tons to 12,000 tons were expected to be shipped from Onsan to Mumbai in mid-September. A 10,000-ton cargo was quoted for lifting in Daesan to Hazira and/or Mumbai and Hamriyah in late Sep.

Base oil demand in China appeared to be slowly regaining its strength and buying interest in imports has improved, but prices were not considered competitive given the weakening of the Chinese currency against the U.S. dollar.

Domestic output was considered sufficient to meet most requirements, but an exception may be the heavy-viscosity grades such as Group I bright stock, which China has a chronic shortage of. However, this grade has been tight in Asia and there were no fresh spot offers. Most discussions centered on contract cargoes for shipment in September and October. There was talk of a 1,500-metric ton cargo being shipped from Onsan to Zhenjiang in the first week of September, and a smaller cargo to Zhangjiang on the same dates. About 2,500 tons were expected to be shipped from Onsan to Jingjiang in early September, and a small cargo was on the table for shipment to Dongguan. A 4,000-ton lot was mentioned for shipment from Rayong, Thailand, to Nantong in late October.

The start-up of the new Hongrun Petrochemical Group III facility in China added pressure to the amply supplied Group III segment in Asia. Interest in Group III has been steady, but supplies had grown as most facilities in Asia and the Middle East had been running at optimal rates, although production curbs may take place in the last quarter.

There were also expectations that the upcoming start-up of a Group III facility in India would add pressure to the already well-supplied Group III sector.

Slightly long Group III supplies have been exerting downward pressure on prices, and the next significant turnarounds at Group III facilities in Asia were not expected to take place until 2024, with Petronas in Malaysia and SK Enmove in South Korea planning to complete maintenance programs in the first half of the year.

Crude oil and feedstock prices continued to climb and were hovering near 10-month highs, triggering price increases for naphthenic and paraffinic base oils in the different regions. Increase initiatives surfaced this week in the United States and indications in Asia and Europe remained exposed to upward pressure as well. Diesel margins appeared more attractive than those of Group I and Group II base oils, impacting how refiners would allot feedstocks at the refinery level.

Crude oil futures jumped again this week on predictions of robust global crude demand in 2024 amid ongoing production curbs by OPEC+ producers Saudi Arabia and Russia. Brent crude was hovering above $92 per barrel on Thursday but had slipped on Wednesday on reports of a surprise build in U.S. crude inventories, which eased supply concerns.

On Sept. 14, Brent crude November futures were trading at $92.39 per barrel on the London-based ICE Futures Europe exchange, up from $89.99/bbl on Sept. 7.

Dubai front month crude oil (Platts) financial futures for October settled at $91.94 per barrel on the CME on Sept. 13, from $90.76/bbl on Sept. 6.

Base oil spot price assessments were mixed again in Asia this week, with prices for a number of grades moving up, some remaining unchanged, and others slipping. 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-firm. The Group I solvent neutral 150 grade was higher by $10/t at the top end of the range at $800/t-$840/t, and the SN500 was also higher by $10/t at $930/t-$970/t. Bright stock was hovering at $1,070/t-$1,110/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed up by $10/t at $940/t-$980/t and the 500N was higher by $20/t at $1,010/t-$1,050/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was heard up by $20/t at $710/t-$750/t, and the SN500 climbed by $10/t to $840/t-$880/t. Bright stock prices were up by $10/t at $890/t-930/t, FOB Asia, although offers were scant.

The Group II 150N was assessed up by $20/t at $830/t-$870/t FOB Asia, and the 500N edged up by $10/t as well to $870/t-$910/t, FOB Asia.

In the Group III segment, 4 centiStoke and 6 cSt prices fell again this week due to plentiful supplies and competition among suppliers. The 4 cSt was assessed lower by $20/t at $1,360-$1,390/t, and the 6 cSt fell by $20/t as well to $1,320/t-$1,360/t. The 8 cSt grade was unchanged at $1,070-$1,110/t, amid thin discussions. All indications are 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.

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