Asia Base Oil Price Report


Steep crude oil prices and tightening supply continued to place pressure on base oil prices in Asia, although oil prices slumped towards the end of the week following an agreement by members of the International Energy Agency to release 120 million barrels of crude oil from strategic reserves.

The ongoing Russian war on Ukraine, together with potential additional sanctions on Russian financial assets and crude oil, coal and natural gas exports by the United States, the European Union and other nations were expected to impact energy prices for the next several weeks. Recent negotiations between Ukraine and Russia yielded no significant progress, and news about alleged war crimes committed against Ukrainian civilians by Russian soldiers added fuel to the international outrage.

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While the conflict was not taking place on Asian soil, its reverberations were expected to affect the global supply not only of energy, but also of food and other items, as Ukraine is a large exporter of grains and glass, aluminum cans, steel, machinery and other products.

Base oil market participants mentioned the steep feedstock prices seen of late, as well as rising freight and insurance rates as leading to more price adjustments during the week. Congestion at Chinese ports due to the implementation of city-wide COVID-19 related lockdowns in port cities like Shanghai were also expected to exacerbate logistical issues and exert pressure on freight rates as vessel space tightened.

Asian refiners were also assessing refinery economics, given that higher gas oil prices incentivized the production of gasoil versus base oils, which meant that certain grades could become less available.

Furthermore, a seasonal pickup in base oil demand and tightening supply levels on the back of ongoing and upcoming turnarounds at API Group II and Group III facilities exerted upward pressure on prices as well. According to reports, SK’s plant in Ulsan, South Korea, would be undergoing a turnaround in April-May that would affect Group III production. Also in South Korea, GS Caltex’s Group II and Group III plant in Yeosu, South Korea, was expected to be run at reduced rates for three weeks in April. South Korean producer Hyundai-Shell will also be idling its Group II plant in Daesan in late April for slightly over a month of maintenance.

In China, Handi Sunshine was heard to have scheduled maintenance at its Group II refinery in Hainan for two months, starting in late March. Another Chinese producer was expected to shut down its Group I plant this month. Several refiners have cut back production rates given plummeting production margins.

While Chinese buying interest had slackened in the first two months of the year, buying appetite showed an upturn in March as manufacturers were in the midst of the spring production cycle. The Group I cuts and heavy-viscosity grades were the most difficult to locate as local producers do not offer enough output to cover domestic needs and there was a turnaround scheduled at a large Group I plant as mentioned above.

The recently imposed lockdowns to prevent the spread of the coronavirus in China triggered concerns about reduced demand for lubricants as the population’s mobility and transportation usage were reined in, so buyers showed a certain degree of caution in terms of acceptable price levels.

Chinese buyers looked for spot buying opportunities in Southeast Asia, but buyers in Singapore, Indonesia, Malaysia, Vietnam, India and the Philippines were in a more advantageous position to secure the cargoes offered by Southeast Asian suppliers because of lower freight rates and fewer logistical issues. Singapore continued to export significant volumes throughout Southeast Asia and Japan.

Taiwanese Group II supplies, which typically move under term contracts and spot conditions to China, were expected to be curtailed this month as Formosa Petrochemical was heard to have shut down its plant in Mailiao unexpectedly. The shutdown was anticipated to be brief – a little over a week – but the lost production meant that the supplier would be able to offer less spot availability. Approximately 6,200 metric tons of base oils were booked for shipment from Mailiao to Mumbai, India, at the end of April.

Indian buyers appeared to be relying more heavily on domestic and regionally sourced cargoes as well, as shipments from the U.S. and the Middle East were anticipated to be less copious in coming weeks due to less attractive pricing at origin and strained supply conditions. Although U.S. Group II producers had been able to offer plentiful supplies during the second half of 2021, domestic demand at home has picked up, leading to reduced availability of spot export cargoes. In the Middle East, plant turnarounds were also anticipated to result in less export supply for some time.

Spot base oil prices in Asia were stable to firm this week, with robust demand and firm crude oil and feedstock prices offering support to higher price ideas. The ranges portrayed below reflect bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were stable to firm this week on strong fundamentals. The Group I solvent neutral 150 grade was assessed at $1,050/t-$1,080/t, and the SN500 was higher by $10/t at $1,210/t-$1,250/t. Bright stock was assessed up by $20/t at $1,350/t-$1,390/t, all ex-tank Singapore.

Prices for the Group II 150 neutral moved up by $30/t to $1,160/t-$1,200/t, and the 500N edged up by $30/t as well to $1,230/t-$1,290/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was hovering at $990/t-$1,030/t, and the SN500 was up by $20/t at $1,100/t-$1,140/t. Bright stock increased by $20/t as well to $1,180/t-1,220/t, FOB Asia.

The Group II 150N was holding at $1,000/t-$1,040/t FOB Asia, and the 500N and 600N cuts edged up by $20/t to $1,060/t-$1,100/t, FOB Asia.

In the Group III segment, prices were steady. The 4 centiStoke was assessed at $1,480-$1,520/t, and the 6 cast at $1,460/t-$1,500/t. The 8 cSt grade was unchanged week on week at $1,190-1,220/t, FOB Asia, all for fully approved product.

Upstream, crude oil futures plunged by 5% on Thursday as members of the International Energy Agency (IEA) agreed to release 120 million barrels of crude oil from the world’s strategic energy stockpiles, according to Bloomberg. However, the potential bans on Russian crude oil and natural gas imports by the European Union exerted upward pressure on prices.

On April 7, Brent May futures were trading at $103.20 per barrel on the London-based ICE Futures Europe exchange, from $108.64 on March 31 and $121.50/bbl for April futures on March 24.

Dubai front month crude oil (Platts) financial futures for May settled at $95.42/bbl on the CME on March 30, from $103.70/bbl on March 30 and $113.74/bbl for April futures on March 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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