Asia Base Oil Price Report


There was a sense of uncertainty in base oils market related to the discovery of the new coronavirus strain known as Omicron. The new variant prompted many countries to close borders and implement travel restrictions to reduce the mutated virus’ spread. Airlines cancelled hundreds of flights as a result, and this may lead to a drop in jet fuel consumption, which in turn may prompt refiners to reduce run rates once again as they had in the early days of the pandemic. Crude oil prices slumped to multi-year lows as soon as news of the new variant was announced.

A recent surge in coronavirus cases in Europe had resulted in a few countries reimposing lockdowns and other measures. This situation and the release of strategic crude reserves in several key oil consumer countries had already impacted crude oil and refined product prices over the last couple of weeks, lifting some of the upward feedstock pressure on base oils.

The strategy of dialing back operating rates at refineries was one of the factors that had caused a tightening of base oil supply when the COVID-19 pandemic first started, because it had led to reduced feedstock availability. New restrictions and lockdowns could potentially bring about a reduction in fuels and lubricants demand as the population’s mobility gets restricted, and this might in turn prompt refiners to cut run rates.

For the time being, market participants have adopted a wait-and-see attitude as more information about Omicron’s impact becomes available. Most base oil segments had already been under pressure due to the approach of Dec. 31, as both buyers and sellers prefer to end the year with lean inventories while they strive to use up existing stocks.

The softening effect of the year-end holidays was not noticeable on all base stock grades, however. Some of them, such as the API Group III 4 centiStoke grade, continued to enjoy plenty of buying interest and remained fairly tight. There was steady demand for the 6 cSt cut, but supply of the 8 cSt cut seemed to be lengthening. It was heard that some sellers were resorting to selling two or three grades in a bundle to encourage buyers to take quantities of the three cuts, not just the 4 cSt grade.

The light viscosities within the Group I and Group II categories were also in demand, as many cold-weather formulations require the use of light-vis grades for blending. Spot prices for these grades were largely stable as a result, as opposed to the heavy-vis grades, which were more exposed to downward pressure.

As mentioned the previous week, the more plentiful supply of Group I and Group II heavy grades in Asia has led a key Southeast Asia producer to lower its prices by $20-$60 per metric ton as of mid-November, with the higher decrease amount corresponding to the price of bright stock.

Northeast Asian suppliers have also adjusted down their offers in order to attract business, with cargoes moving to China, India and Southeast Asia. A number of Middle East parcels have also been discussed to move to India, with a 16,000-metric ton lot heard for shipment from Yanbu and Jeddah, Saudi Arabia, to West Coast India in mid-December. A smaller cargo was on the table to move from Yanbu to Singapore this month as well.

Indian consumers showed healthy interest in light viscosity base stocks, and demand seemed to have improved compared to a few weeks ago when diesel prices had fallen and the country was celebrating the Diwali festival period. The arrival of ample supplies from South Korea, the United States and the Middle East helped mitigate worries about a possible lack of availability and prompted resistance to suppliers’ price indications.

Several U.S. and South Korean cargoes were scheduled to arrive in India this month. Concerns about rising freight prices was placing a damper of some of the inquiries that surfaced during the week. Some of India’s Group I product needs were fulfilled with shipments of Iranian material.

In China, demand for imports was more subdued as domestic prices have softened and buyers saw less of an incentive to turn to outside sources, especially for light viscosity grades. The anxious bids to secure Southeast Asian cargoes of heavy grades and bright stock appear to have subsided. There have been attractive offers from Southeast Asia, but Chinese buyers have stayed away from the trading scene as they have been able to meet requirements with domestic products.

Availability in China has also improved following the restart of Taiwanese producer Formosa Petrochemical’s Group II plant after completion of a turnaround in late September. The producer typically exports a large portion of its production under contract to China.

Spot base oil prices were steady to soft this week in Asia as each base oil segment responded to differing factors. The spot ranges portrayed below were revised to reflect bids and offers, deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were steady to slightly lower as a major supplier lowered some of its prices in recent weeks. The Group I solvent neutral 150 grade was holding at $870/t-$900/t, and the SN500 was unchanged at $1,020/t-$1,060/t. Bright stock was hovering at $1,250/t-$1,290/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were steady at $910/t-$950/t, while the 500N was down by $20/t to $1,220/t-$1,260/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was steady at $770/t-$810/t, and the SN500 was holding at $880/t-$920/t. Bright stock was assessed down by $20/t at $1,090/t-1,130/t, FOB Asia.

The Group II 150N was steady at $800/t-$840/t FOB Asia, but the 500N and 600N cuts were down by $40/t at $960/t-$1,000/t, FOB Asia.

In the Group III segment, prices were largely steady, although the 8 cSt continued to face downward pressure due to plentiful supply against subdued demand. The 4 centiStoke was holding at $1,440-$1,480/t and the 6 cSt was at $1,430/t-$1,470/t. The 8 cSt grade was assessed at $1,220-1,260/t, FOB Asia, all for fully approved product.

Upstream, crude oil futures had plummeted to multi-year lows late last week on news about the Omicron variant being detected in South Africa and other countries, but prices rose on Thursday, recovering the previous day’s losses, as investors reassessed positions ahead of an OPEC+ meeting. The organization was expected to discuss adjustments to its supply policy amid concerns that the Omicron variant might cripple fuel demand.

On Dec. 2, Brent February futures were trading at $70.64 per barrel on the London-based ICE Futures Europe exchange, from $82.58/bbl for January futures on Nov. 24.

Dubai front month crude oil (Platts) financial futures for January settled at $66.69/bbl on the CME on Dec. 1, from $79.65/bbl for December trades on Nov. 23 (CME note: Settlement prices on instruments without open interest or volume are provided for web users only and are not based on market activity.)

Gabriela Wheeler can be reached directly at 

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

Archived base oil price reports can be found through this link:

Historic and current base oil pricing data are available for purchase in Excel format.

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