Asia Base Oil Price Report


The end of the Lunar New Year holidays and a need to replenish stocks were expected to revitalize a muffled Asian base oils market. Buyers had postponed purchases on hopes that prices would soften after the festive period as values of several grades had been under pressure before the holidays. A slightly long supply and demand balance continued to weigh on prices, but suppliers appeared reluctant to lower prices as feedstock values have edged up.

Crude oil prices hit their highest levels since early December last week on expectations that Chinese oil demand would improve following the lifting of stringent COVID lockdowns and restrictions. The celebration of the Lunar New Year or Spring Festival and the temporary migration of millions of Chinese to their hometowns were expected to provide a boost to fuel and lubricants consumption.

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At the same time, regional governments in China were struggling with high debt given steep expenditures during COVID lockdowns and slowing economic activity, which prompted authorities to slash wages, trim transportation services and reduce fuel subsidies in the middle of a harsh winter, reported. An economic recovery in China might not be as fast and robust as expected following the lifting of the government’s stifling zero-COVID measures and this might impact the performance of fuels and lubricant markets, according to market observers.

There were discussions surrounding several base oil shipments to China from Singapore, South Korea and Taiwan in February, likely transacted to meet an expected demand growth as blenders prepared for the spring production cycle.

Gasoil and diesel prices were on the rise given the European Union embargo on Russian imports of refined products – which will go into effect on Feb. 5 – leading to strained global supplies. The higher prices might prompt Asian refiners to increase distillates output and reduce the production of base oils if margins became less attractive. This could contribute to a tightening of base oil supplies at a time when demand was expected to pick up ahead of the spring lubricant production season.

Plant turnarounds scheduled in the first quarter in Singapore, Indonesia, South Korea and China may exacerbate the snug supply situation, sources noted. A plant turnaround in South Korea was anticipated to affect API Group III availability, although current supply levels were deemed ample to meet demand. Group III barrels from the Middle East were also available to cover part of the growing requirements in Asia.

In India, buyers remained wary of securing too much product on concerns that prices might weaken in coming days as availability of most grades appeared plentiful, with bright stock being an exception. Bright stock prices were generally holding at steady levels or edged up slightly on snug supplies against growing regional demand. Rising buying interest from China for bright stock as the spring oil change season approached was also expected to strain supplies and boost prices.

As mentioned above, upcoming plant maintenance in Southeast Asia and Japan might lead to increasingly tight supplies of bright stock and other Group I grades. A very small price difference between Group I and Group II prices encouraged consumers to favor Group II grades whenever applications allowed.

Domestic refiners in India were running plants at top rates and were able to offer competitive base oil prices given that they had access to heavily discounted Russian crude oil to run refineries. Consumers were therefore comfortable relying on local supplies of base stocks and less eager to run the risk of acquiring imports that may take several weeks to arrive and were likely priced at steeper levels, particularly as freight rates remained high. Several import cargoes were expected to reach Indian shores in coming weeks and sellers may find it challenging to place these volumes, unless they showed some flexibility in terms of pricing.

Several import cargoes were being considered, including a 3,000-metric ton lot for shipment from Onsan, South Korea, to Mumbai in early February. A 4,000-ton parcel was quoted for lifting in Sri Racha and Rayong, Thailand, to West Coast India and/or Ras Al Khaimah, United Arab Emirates, in the first half of February.  About 6,000 tons were mentioned for shipment from Ruwais, United Arab Emirates, to Mumbai and/or Kandla and possibly other ports in the second half of February. Approximately 7,000 tons were also discussed for shipment from Yeosu or Ulsan, South Korea, to Mumbai in late February. A cargo originating in Qatar was also mentioned in connection to business to India.

The possibility of tightening supplies in Southeast Asia in coming weeks prompted buyers to look for cargoes in other parts of Asia, with a 2,500-metric ton lot made up of three grades on the table for shipment from Onsan to Merak, Indonesia, in mid-February. About 2,000 tons were being discussed for shipment from Yeosu and/or Ulsan, South Korea, to Manila, Philippines, in mid-February.

Spot base oil prices in Asia were assessed as largely unchanged as business has just started to pick up after the Lunar New Year holidays last week, although bright stock prices inched up on tightening supplies and higher seller indications. A clearer price picture should emerge in coming days. 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 week on week, with the exception of bright stock, which edged up. 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 was up by $10/t at $1,290/t-$1,330/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were steady at $970/t-$1,010/t, and the 500N was unchanged at $1,000/t-$1,050/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $790/t-$830/t, and the SN500 at $820/t-$860/t. Bright stock prices were higher by $10/t at $1,070/t-1,110/t, FOB Asia.

The Group II 150N was heard at $800/t-$840/t FOB Asia, and the 500N and 600N cuts were steady at $820/t-$850/t, FOB Asia.

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

Upstream, crude oil futures steadied on Thursday – after plunging in the previous session – boosted by a weakening dollar and the upcoming implementation of sanctions on Russian oil products, which were expected to limit supplies and offer additional support to prices.

On Feb. 2, Brent April futures were trading at $82.80 per barrel on the London-based ICE Futures Europe exchange, from $86.34/bbl for March futures on Jan. 26.

Dubai front month crude oil (Platts) financial futures for March settled at $79.45 per barrel on the CME on Feb. 1, compared to $83.02/bbl for Feb. futures on Jan. 25.

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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