Asia Base Oil Price Report


Despite soft demand due to economic uncertainties affecting several countries in Asia, some base oil prices have edged up because of tightening conditions caused by production outages andshipping disruptions. However, values for a number of grades weakened on ample supplies, while some prices showed little change.

Market participants continued to monitor developments in the Red Sea, where Iran-backed Houthi rebels persisted on attacking container ships and oil carriers, despite an international coalition’s military strikes on Houthi targets in Yemen.

As many as 100 tankers carrying about 56 million barrels of crude oil and fuels have been diverted from the Red Sea, according to Reports circulated that the Houthi militants had fired a missile at a ship carrying oil products for the commodities trader Trafigura – including Russian naphtha bound for Singapore – last Friday, sending naphtha prices to ten-month highs.

The turmoil that has effectively closed the Suez Canal to commercial ship movements was expected to impact mostly Europe, because the Red Sea route serves as the shortest gateway from the Middle East and Asia to that region. Asia was anticipated to continue receiving crude oil and natural gas without too many disruptions, although freight rates in general have climbed.

There are indications that the flow of oil from the Middle East to Europe has already dropped by close to 50%, but oil prices have not reflected the supply disruptions yet, although they did spike early in the week following an Iran-backed drone attack that killed three United States servicemen in Jordan over the weekend. Crude oil futures fell later in the week on concerns about the well-being of the Chinese economy and on a U.S. crude inventories build. China’s deepening real estate crisis came to the forefront this week as a Hong Kong court ordered the liquidation of property giant China Evergrande Group.

On Thursday, Feb. 1, Brent April 2024 crude futures were trading at $81.71 per barrel on the London-based ICE Futures Europe exchange, from $81.23/bbl for March futures on Jan. 25.

Dubai front month crude oil (Platts) financial futures for Feb. 2024 settled at $79.97 per barrel on the CME on Jan. 31, from $79.06/bbl on Jan. 24.

The crude oil price fluctuations did not have a direct impact on base oil prices, as they seemed to be mostly swayed by supply and demand fundamentals. While some grades were deemed plentiful and were therefore exposed to downward pressure, prices for a few grades moved up due to tightening conditions and emerging demand.

During the last stretch before the Lunar New Year holidays that start on Feb. 10 in China, demand showed an uptick as blenders needed to replanish inventories given increased lubricant consumption ahead of the festivities, when millions of people travel to their hometown. Many facilities shut down during the holidays, and deliveries were also expected to be halted for about a week to ten days.

Given production shutdowns in Southeast Asia, where most API Group I production originates, supplies have tightened, driving offer prices up. A two-month turnaround at a Thai base oil plant that started in January was expected to limit availability of Group I base oils. A second producer, which had experienced production issues last December, was anticipated to be able to offer limited spot cargoes this month. Exports from Indonesia have been reduced in recent months due to healthy domestic demand.

Japanese spot exports have also been restricted because a key supplier was focusing on meeting domestic demand. Production capacity in Japan has been curtailed after the permanent closure of two Eneos Group I plants since 2022, although the products from these units were mostly used for domestic production of lubricants and not exported.

While Group I supplies were growing scant, availability of Group II grades seemed plentiful, and many consumers were able to use these grades instead of Group I cuts in certain applications. Buyers resisted the higher price ideas for Group I material because there were also Group II grades readily available. The heightened buying interest for Group II grades, in turn, led to steeper Group II price indications.

Group II domestic supply was plentiful in China, although the country still has a deficit of heavy-viscosity grades, and there had been expectations that following the restart of Formosa Petrochemical’s Taiwanese Group II plant last December, additional cargoes would be available for shipment to China. However, the plant suffered an unexpected production outage caused by a fire that broke out at the affiliated refinery on Jan. 24. This incident was anticipated to curtail base oil output for several days.

Additionally, the Hyundai-Shell Base Oils Group II plant in South Korea, which typically also ships base oils to China, was running at reduced rates due to issues with feedstock supply from the associated refinery.

A number of cargoes were being discussed for shipment to China this month. A 2,000-metric ton parcel was expected to be shipped from Singapore to Tianjin in the first half of February. A 2,500-ton parcel made up of two grades was anticipated to be loaded in Yeosu, South Korea, to Taicang in late February. A 4,000-ton cargo was on the table for shipment from Singapore to Zhuhai and Zhapu in mid-February.

South Korean suppliers were finalizing February shipments to several destinations in Asia, with a 3,000-ton cargo expected to be lifted in Yeosu for delivery in Singapore in mid-February. A 2,800-ton parcel was discussed for shipment from Yeosu to Taichung, Taiwan, in mid-February. A 1,000-ton parcel was lined up for shipment from Ulsan to Ho Chi Minh, Vietnam, in mid-February. About 12,000 tons to 13,000 tons were heard to have been shipped from South Korea to the United Arab Emirates in mid-January.

Group III availability was generally plentiful, and this was placing downward pressure on pricing. There were no shortages reported despite the start of a turnaround at a Malaysian Group III plant in late January, which was anticipated to last until early March. However, SK Enmove has also scheduled a one-month turnaround at its Group III units in Ulsan, South Korea, in late March, and this may tighten regional spot availability.

In India, spot prices were generally steady as demand has shown a slight uptick because blenders increase finished products production to sell ahead of the end of the fiscal year on March 31. Despite upward pressure on some grades due to tightening regional availability, plant turnarounds and some domestic production hiccups, buyers resisted the higher indications and prices remained largely unchanged from the previous week.

Group II heavy-vis grades were on the tight side, supporting current prices. Some suppliers hiked their offer levels by $10-15 per metric ton, but buyers showed little interest in paying the higher values and held off on purchases for as long as possible. Group III grades were more available and as such, prices were under pressure, with selling indications edging down by $10/t to $20/t week on week on a CFR India basis.

Fairly large cargoes were being discussed for shipment to India this week. About 23,000 tons of base oils, hexane, and other refined products were expected to be shipped from Singapore to Mumbai, Hazira, Kandla and Karachi, Pakistan, in late February. Anywhere between 8,000 tons to 13,000 tons were expected to be shipped from Onsan to Mumbai in early February. A 10,000-ton lot was discussed for shipment from Pyongtaek, South Korea, to West Coast India on Feb. 25.

Base oil prices in Asia were mixed compared to the previous week. As mentioned above, some prices slipped on ample supplies, some were unchanged, and others edged up on tightening conditions. 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 higher from the previous week. The Group I solvent neutral 150 grade was unchanged at $870/t-$910/t, and the SN500 was assessed at $990/t-$1,020/t. Bright stock was steady at $1,200/t-$1,240/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were holding at $950/t-$980/t, but the 500N moved up by $10/t to $980/t-$1,020/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was heard at $770/t-$810/t, while the SN500 was up by $10/t at $890/t-$920/t. Bright stock prices edged up by $10/t to $1,050/t-1,090/t, FOB Asia on tightening supply.

The Group II 150N edged up by $10/t to $770/t-$810/t FOB Asia, and the 500N was assessed higher by $20/t at $800/t-$830/t FOB Asia.

In the Group III segment, 4 centiStoke, 6 cSt and 8 cSt prices were steady to softer. The 4 cSt fell by $30/t to $1,130-$1,160/t, and the 6 cSt declined by $10/t to $1,130/t-$1,170/t. The 8 cSt grade was unchanged at $930-$970/t. 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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