However, the International Energy Agency on Thursday said there were signs that the global oil demand was slowing, and this trend was expected to continue in 2024, placing downward pressure on oil prices.

On Thursday, Dec. 14, Brent February 2024 crude futures were trading at $76.62 per barrel on the London-based ICE Futures Europe exchange, from $74.44/bbl on Dec. 7.

Dubai front month crude oil (Platts) financial futures for January 2024 settled at $73.16 per barrel on the CME on Dec. 13, from $74.34/bbl on Dec. 6.

Base oil buyers were holding off on purchases for as long as possible as they prioritized working down existing inventories to avoid paying taxes on standing stocks at the end of the year and were also aware that the lower crude oil and feedstock pricing would soon trickle down to base oils. With fuel prices weakening, refiners also had an additional incentive to produce more base oils versus distillates, which can lead to mounting inventories, unless producers are able to place product quickly. This may motivate some suppliers to lower prices to encourage more business deals before the year was over.

The API Group I segment showed the tightest conditions because several Group I plants have shut down in recent years, including the Group I plant in Wakayama that Eneos shuttered permanently last October as the country strives to encourage more sustainable fuel and lubricants production options. Eneos had also conducted a maintenance program at its Mizushima A Group I plant from September until late November, adding to the snug Group I conditions. Japan has had to resort to additional import volumes to make up for the lost production, according to sources.

In Southeast Asia, domestic demand in some of the Group I-producing countries remained steady, leaving fewer cargoes for export, but some intimations of a slowdown have started to emerge, partially offsetting the tight conditions. Consumers were also starting to secure term volumes for next year, and there was a certain amount of concern whether all requirements could be met as Group I supply has been on the snug side for most of the year.

Spot offers of Group I cargoes were either maintained week on week or underwent slight downward adjustments, depending on the grade, with bright stock remaining largely stable. In shipping circles, a 4,000-metric ton cargo was discussed for shipment from Port Klang or Malacca, Malaysia, to Hamriyah, United Arab Emirates, in late December. A 2,750-ton parcel made up of three grades was mentioned for shipment from Singapore to Taicang, China, in the first half of December. A second parcel of 1,000 tons was expected to be shipped from Singapore to Manila, Philippines, in the second half of December.

Group II availability has lengthened as most plants were running at top rates while demand has weakened. Several regional suppliers were competing for business, along with United States imports. Sellers have adjusted offers down to encourage purchases, but many buyers were holding back on hopes that prices would continue to slip, particularly as some consumers were in possession of enough inventories to run day-to-day operations and were not interested in building inventories during the last few days of the year.

Supplies were also expected to grow in the region as the sole Group II producer in Taiwan, Formosa Petrochemical, was expected to restart its base oils plant in Mailiao in early December, following a two-month turnaround. While the producer had restricted its spot sales before and during the turnaround, it was heard that a couple of spot offers for Taiwanese product have emerged. A 3,500-ton cargo was mentioned for shipment from Mailiao to Singapore in the second half of December, although it could not be ascertained whether this was a term cargo or a spot transaction.

Supply of Group III grades was deemed plentiful, and prices also remained under pressure, particularly as buying interest in other regions such as the Americas has weakened. Nevertheless, demand was likely to pick up early in 2024 as buyers will likely have to replenish stocks.

SK Enmove plans to shut down its Group III base oil units in Ulsan in March for a month-long turnaround, with spot availability expected to be reduced given that the producer will likely start to build inventories ahead of the shutdown, according to sources.

In China, domestic prices were heard to be sliding on lackluster seasonal demand and ample availability of most grades. While China still suffers from a deficit of heavy grades, particularly bright stock, imports have been able to fill the void and several cargoes of Group I and Group II grades were being discussed during the week, despite the slower demand. Group III buying interest for imported material has fallen as a domestic producer was offering attractive prices in a quest to conquer market share.

A number of cargoes heading to China were discussed during the week. An 8,000-metric ton cargo was mentioned for shipment from Hong Kong to Tianjin in early December. A 2,000-ton lot was on the table for shipment from Yeosu, South Korea, to Rugao in early January. A 2,000-ton parcel was likely to be lifted in Sri Racha, Thailand, to Zhenjiang in the second half of December or the first half of January. A 3,000-ton cargo was discussed for shipment from Rayong, Thailand, to Nantong at the end of January. A 2,350-ton cargo was being considered for prompt shipment from Yokohama, Japan, to Zhenjiang.

South Korean suppliers have been busy placing December cargoes, with several transactions being finalized during the week. In shipping circles, a 3,200-ton parcel was quoted for shipment from Ulsan to Ho Chi Minh, Vietnam, and Koh Sichang and Bangkok, Thailand, in the first half of January. A 1,200-ton parcel was expected to be shipped from Onsan to Merak and Tanjung Priok, Indonesia, in Jan. A 4,000-ton lot was mentioned for shipment from Ulsan to Hamriyah, United Arab Emirates, in the second half of December. A 5,000-ton cargo was quoted for shipment from Ulsan to Yanbu, Saudi Arabia, in late December. About 3,000 tons were also being considered for shipment from Yeosu to Gebze, Turkey, in January. A 2,000-ton cargo was discussed for lifting in Yeosu to Tanjung Priok in December or the first half of January. A 3,000-ton lot was also mentioned for shipment from Yeosu to Merak in December or the first half of January.

In India, base oil prices have generally slipped on plentiful availability and sluggish offtake. Falling crude oil and gasoil prices and the availability of most grades from domestic producers exacerbated the trend. Spot indications on a CFR India basis saw decreases of $5 per metric ton to $20/ton, depending on the grade, with the Group II and Group III grades reflecting the heftier adjustments given a global overhang of these grades.

Offers from U.S. Group II suppliers were competitive against local and regional indications. Some discussions for January shipment of U.S. cargoes were taking place, but U.S. supplies may dry up if domestic demand starts to pick up in February ahead of the U.S. peak lubricant production season. This week, it was heard that about 5,000 tons to 10,000 tons had been discussed for prompt to late Dec. shipment from Lake Charles, U.S., to Mumbai. Additionally, a 2,000-ton cargo was also mentioned for lifting in Sitra, Bahrain, to West Coast India.

Base oil spot prices were steady to softer in Asia this week, depending on supply and demand factors. 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 lower from the previous week. The Group I solvent neutral 150 grade was heard at $870/t-$910/t, and the SN500 was unchanged at $990/t-$1,020/t. Bright stock was holding at $1,180/t-$1,220/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were lower by $20/t at $970/t-$1,000/t, and the 500N also slipped by $20/t to $1,010/t-$1,050/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 edged down by $20/t to $780/t-$820/t, and the SN500 slipped by $10/t to $890/t-$920/t. Bright stock prices were steady at $1,000/t-$1,040/t, FOB Asia.

The Group II 150N fell by $10 at the high end of the range and $20/t at the low end to $800/t-$840/t FOB Asia, and the 500N by $10/t to $820/t-$850/t FOB Asia.

In the Group III segment, 4 centiStoke, 6 cSt and 8 cSt prices were assessed steady to softer compared to the previous week. The 4 cSt was assessed down by $30/t at $1,200-$1,230/t, and the 6 cSt was adjusted down by $20/t to $1,180/t-$1,220/t. The 8 cSt grade was steady at $940-$980/t. All indications are FOB Asia for fully approved product.

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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