Weekly Asia Base Oil Price Report

In China, base oil requirements were less robust than anticipated for this time of the year, when lubricant manufacturers increase production rates to meet demand during the warmer months. Economic uncertainties still appeared to be dampening consumption, with the Chinese government seemingly more interested in consolidating its stronghold than on improving the country’s economy. “While the National People’s Congress – the annual gathering of China’s legislature that began on Wednesday – is on the surface deliberating on how to fight the country’s pressing economic problems, leaders are discussing behind the scenes how to keep the power structure centered on [Chinese President] Xi Jinping,” Nikkei Asia reported last week. New tariffs announced by the U.S. president on Chinese goods only led to more concerns about economic growth. The U.S. doubled the levies imposed last month on Chinese products to 20%.

China is consistently short on some of the heavier base oils, such as the API Group I bright stock, but import transactions were sluggish as buyers appeared to be reluctant to acquire product at higher prices. Most of the region has seen a steady rise in bright stock prices over the last several months as supplies were limited due to planned turnarounds at several facilities as described in the production section below. While Chinese buyers had seemed to be prepared to pay steeper prices to secure supplies from Southeast Asia earlier, there were few deals concluded as cargoes were scarce and buying interest has fizzled. Many preferred to use up existing inventories or purchase from local distributors and suppliers.

Indonesian Group I producer Pertamina was heard to have completed a maintenance program at its plant in Cilacap late last month and was expected to bring more supplies to the market through a tender, which was anticipated to be closed on March 10.

There was also talk about a couple of Group I cargoes being offered by a Thai producer for April shipment, and although the offers sparked some interest, it could not be ascertained whether there were any takers as some buyers were hesitant to secure base stocks when feedstock prices were trending down.

Although softer crude oil and feedstock prices were exerting downward pressure on base oil prices, Group II offers from regional suppliers were firm or edged up given limited inventories. This was particularly true for South Korean base stocks as refiner Hyundai Oilbank/Shell suffered unexpected production issues last week and a lack of feedstocks resulted in severely curtailed run rates at the associated Group II base oil plant. The producer was expected to have started to ramp up base oil operating rates late last week as the feedstock supply issues appeared to have been largely resolved.

Given that a second South Korean Group II producer began a turnaround in late February, offers from that country have tightened, supporting prices. Furthermore, with volumes moving from Taiwan to China having fallen since the middle of last year due to new tariffs, Group II import availability in China was somewhat strained. A couple of domestic plant turnarounds added to the tight conditions, but weakening demand offset some of the tightness. Group II domestic suppliers were in possession of plentiful supplies and either kept prices steady or offered small discounts to attract business.

The Group III segment saw more balanced fundamentals in China as a local producer resumed Group III production earlier in the year, following a turnaround, and was offering discounts to gain market share. A second domestic producer was also understood to offer competitive prices. There were some volumes moving from the Middle East as well, but these may dwindle if buying interest and prices continue to strengthen in Europe and the United States, attracting volumes away from Asia.

In India, the upward base oil price trend observed in recent weeks seemed to have stalled given demand uncertainties and falling crude oil and feedstock prices. While import prices for the heavy grades had edged up last week, they have stabilized as buying appetite has declined and buyers resisted the higher price indications.

Despite tight conditions for the Group I light grade, the availability of competitively priced Middle East material and adequate domestic supply placed pressure on prices from other origins. On a CFR India basis, Group I solvent neutral 150 slipped by about U.S.$5 per metric, ton week on week. Import prices for other Group I cuts were heard to be steady. Tightening domestic supplies because of turnarounds at two local plants drove one supplier to increase domestic prices.

The Group II cuts were slightly less readily available due to plant shutdowns in South Korea. The country typically supplies ample volumes to India but offers were firm on reduced supplies. Indian buyers appeared reluctant to increase their bid levels as feedstock prices were on a downward trend, although there may be room for Group II 500 neutral price to move up because supplies of this grade were the tightest.

Meanwhile, Group III import prices were starting to edge up on less abundant availability as suppliers have set their sights on higher-priced markets such as Europe and the U.S. With plant turnarounds in the pipeline in Asia and the Middle East, producers were focusing on meeting contractual obligations and offered fewer spot supplies.

There were a few cargoes under discussion for shipment to India, including a 3,000-4,000-ton parcel expected to load in Sitra, Bahrain, to West Coast India in the first half of March. An 8,000-ton lot was expected to have been shipped from Daesan, South Korea, to West Coast India earlier this month as well.

As mentioned above, the global base oil supply and demand balance may become more strained in the coming months as a string of permanent plant closures, unplanned outages and maintenance programs will reduce availability.

Within the Group I segment, Pertamina’s Group I plant in Cilacap, Indonesia, underwent maintenance work from mid-January until late February, according to reports. This had constrained the volumes available for export from this facility, but the plant was heard to have restarted, and more cargoes were expected to be offered into the spot market.

In India, Hindustan Petroleum Corp. Ltd. was expected to be undergoing a partial Group I/Group II turnaround this month that may last until April.

In China, PetroChina’s Dalian Petrochemical Group I plant in Liaoning province was shut down permanently in late 2024 due to the expected closure of the associated refinery in mid 2025 for its relocation. At the same time, there were expectations that China National Petroleum Corporation/PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils that would likely help offset the Dalian closure, market sources said. Fushun has not yet confirmed the Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 metric tons per year. Fushun was expected to have a six to eight-week turnaround in late Q2 or early Q3 2025, according to sources.

In Japan, tight Group I conditions persisted after the extended shutdown of a Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, but the plant was heard to restarted. This plant was scheduled for a turnaround in May. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program which began in September 2024 and was completed at end of the year. Eneos also plans to complete maintenance at its Kainan and Mizushima plants this year. The Mizushima B plant was expected to be shut down in Feb. for an extended turnaround that will last until May. All of these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the last three years.

Another outage that was expected to have some impact on Group I supplies was the ten-day turnaround at the IRPC Group I plant in Thailand in May. While the producer was expected to build inventories ahead of the outage to meet term obligations, it was likely to prioritize domestic commitments and reduce volumes offered for spot business.

Further down the road, it was heard that Thai Lube Base Oil PLC may be shutting down a lube base oil production unit from early July until mid-August.

Within the Group II segment, some planned turnarounds and an unplanned run cut may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have started a 45-day turnaround at its Group II/Group III plant in Yeosu in late Feb. and had built inventories to cover term commitments during the outage, but spot supplies remained limited.

Also in South Korea, Hyundai Oilbank/Shell has significantly reduced operating rates at its base oil plant since early this month due to a refinery outage which has limited the plant’s feedstock supply. Rates were expected to be increased over the next few days.

In China, an unplanned outage at CNOOC’s Group II unit in Huizhou may be impacting availability in the domestic market.

Also in China, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant to commence this month.

In India, it was heard that Bharat Petroleum Corp. Ltd. would be completing maintenance work at its Group II facilities in Mumbai this month. The maintenance program was expected to have started in late Feb.

In the Middle East, Luberef will be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for maintenance at the end of the first quarter or beginning of the second quarter and was expected to limit spot sales to build inventories ahead of the shutdown.

In the U.S., Chevron was also preparing to shut down its Group II plant in Pascagoula, Mississippi, in late March or April for a three to four-week turnaround and was expected to build inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. There was no direct confirmation about the turnaround from the producer.

In the Group III segment, SK Enmove will undergoing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May. The shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in March.

Prices

Crude oil futures were trading lower following an announcement by OPEC+ that the organization would be lifting its supply curbs, starting in April. Uncertainties and trade disruptions triggered by a trade war between the U.S. and several nations reverberated in stock and crude oil markets throughout the previous week and continued Monday.

On March 10, Brent May 2025 futures were trading at $70.02 per barrel on the London-based ICE Futures Europe exchange, from $73.23/bbl on March 3.

Dubai front month crude oil (Platts) financial futures for April 2025 settled at $70.68 per barrel on the CME on March 7, compared with $73.81/bbl for March futures on Feb. 28.

Spot base oil prices were steady to slightly firmer this week, with a tightening supply and demand scenario exerting upward pressure on some grades, but softer feedstock values deflecting some of the pressure. 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 generally stable to firm from a week ago. Group I solvent neutral 150 was assessed higher by $10/t at $790/t-830/t, but the SN500 was steady at $1,040/t-1,080/t. Bright stock prices were holding at $1,360/t-1,400/t, all ex-tank Singapore.

Prices for the Group II 150 neutral edged up by $10/t to $850/t-890/t, but the 500N was steady at $1,070/t-1,110/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 inched up by $10/t to $660/t-700/t, but the SN500 was holding at $900/t-940/t. Bright stock prices moved up by $10/t to $1,220/t-1,260/t, FOB Asia on limited supplies.

Group II 150N was assessed up by $10/t at $720/t-760/t FOB Asia, while the 500N hovered at $960/t-1,000/t FOB Asia.

In the Group III segment, 4 cSt edged up by $10/t to $1,040/t-1,080/t, and 6 cSt was heard at $1,060/t-1,100/t. The 8 cSt cut held at $960/t-1,000/t on thin activity.

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.