Asia Base Oil Price Report


The base oil demand supply and demand balance was generally tight in Asia, and feedstock prices hovered at steep levels, supporting stable to firm pricing. Participants faced some challenges in locating certain products, along with reduced base oil output at some refineries, mounting production costs, supply chain disruptions and transportation issues.

Given the impact of the pandemic on shipping schedules and vessel movements and the recent Omicron-related lockdowns in China – which impacted when vessels were allowed to discharge at Chinese ports and when they would be available to cover certain routes – market participants struggled with finding vessel space amid climbing freight rates. Aside from higher bunker fuel values, sources said that insurance and certain expenses such as Suez Canal transit fees had resulted in cost increases of at least 25 to 30% compared to earlier this year.

Back in March, Egypt announced that it would increase transit fees for vessels passing through the Suez Canal, one of the world’s key waterways, reported. The Suez Canal Authority said on its website it will add 15% to the normal transit fees for oil-laden and petroleum products-laden tankers, up from the current 5%. The canal authorities said surcharge fees for chemical tankers, and other liquid bulk tankers will be hiked to 20%, up from 10%, while laden and ballast dry bulk vessels will have their surcharges increase to 10%, with an effective date of May 1. On the canal’s website, authorities said the increases come “in line with the significant growth in global trade … and the waterway development and the enhancement of the transit service.” The increase will impact oil and other refined products shipped from the Middle East, sources commented.

Additionally, a shortage of containers had resulted in astronomical prices and difficulties concluding business that involved flexitanks, which hampered transactions into regions such as Latin America.

While base oil prices in Asia were lower than in other regions, the steep transportation costs and logistical difficulties were standing in the way of export transactions.

Meanwhile, regional business was flourishing, with Southeast Asian producers seeing steady demand for API Group I and Group III base oils. The Group I grades were exposed to upward pressure due to the tightening of supplies, as there are fewer refiners producing these cuts, while demand has not contracted as quickly as had been expected. Group I exports from Japan continued to be shipped regularly, but production will see a decrease when the Eneos plant in Negishi is shut down permanently in September this year, while a second Eneos plant in Wakayama is slated to be idled in late 2023. This week, an 8,300-metric ton cargo made up of four grades was heard to have been discussed from Wakayama to Singapore in late April.

Group II and Group III availability from South Korea has been curtailed due to recent and ongoing plant turnarounds. According to reports, SK’s plant in Ulsan, South Korea, would be partially shut down in April-May, affecting Group III production. Also in South Korea, GS Caltex’s Group II and Group III plant in Yeosu was expected to be run at reduced rates in April due to maintenance in upstream units. South Korean producer Hyundai-Shell will also be idling its Group II plant in Daesan in mid-April for slightly over a month of maintenance. There was no direct confirmation from the producers about these turnarounds. Several shipments were being discussed from South Korea to destinations around Asia. A 4,500-metric ton lot of two grades was on the table to be shipped from Pyongtaek to Chennai, India, in late April. A 10,000-metric ton parcel was anticipated to be lifted from Yeosu to Ulsan between April 20-25.

Chinese buyers were heard to be in search of heavy-viscosity base oils as they were in short supply within China. Aside from a structural deficit of these grades, a few turnarounds were expected to exacerbate the current tightness. Handi Sunshine was heard to have scheduled maintenance at its Group II refinery in Hainan for two months, starting in late March. A second Chinese producer was expected to shut down its Group I plant this month until May. Several refiners have cut back production rates given adverse market economics and a preference for fuel production.

There were lingering uncertainties related to the strict lockdowns imposed by the Chinese government in Shanghai and other areas to avoid the spread of Omicron. With the population’s movements being restricted, demand for fuels and lubricants was anticipated to slump. However, it appeared that the restrictions were slowly being relaxed, according to media reports.

Taiwanese Group II supplies, which typically move under term and spot deals to China, were expected to be curtailed this month as Formosa Petrochemical was heard to have shut down its plant in Mailiao unexpectedly. Although the shutdown was brief – a little over a week – the lost production meant that the supplier would be able to offer less spot availability. Some cargoes were understood to have been booked to India at the end of the month.

In India, many buyers have adopted a wait-and-see attitude as they waited for the pricing situation to become clearer, particularly after the strong fluctuations in crude oil values. There was buying interest for Group II cargoes, but availability was snug as the United States was offering little spot export product and prices were not as attractive as at the end of last year, when several cargoes were concluded to India. Competitively priced cargoes from the Middle East could come to the market in coming weeks, while the possibility of obtaining Russian products was still seen as a possibility, despite international sanctions. Middle East business was slightly subdued due to the observance of Ramadan from April 1 until May 1.

Base oil participants in all regions were monitoring developments related to the Russian war on Ukraine, since international sanctions and bans on Russian exports were driving energy prices up. Crude oil values showed sharp fluctuations and it was difficult to predict what prices would do moving forward.

This week, prices moved up on Tuesday and Wednesday, but slipped in mid-morning Asian trade on Thursday, as the two-day rally lost steam following reports that showed U.S. crude oil inventories had risen last week, posting the biggest build since March 2021. “Despite the day’s declines, oil prices remained well bid up from April lows. Since hitting an intra-month low of $97.57/bbl on April 11, the front-month ICE Brent crude contract has added more than $10 per barrel over the subsequent two sessions,” Reuters reported.

On April 14, Brent June futures were trading at $108.04 per barrel on the London-based ICE Futures Europe exchange, from $103.20 for May futures on April 7.

Dubai front month crude oil (Platts) financial futures for May settled at $104.23/bbl on the CME on March 30, up from $95.42/bbl on April 6. (CME note: Settlement prices on instruments without open interest or volume are provided for web users only and are not based on market activity.)

Spot base oil prices in Asia were stable to firm this week, with steady demand and firm crude oil and feedstock prices offering support to current price indications. Ex-tank Singapore Group II ranges received a lift after a major supplier increased its Group II ex-tank prices by $50-90 per metric ton, effective April 12. 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 week on week. The Group I solvent neutral 150 grade was assessed at $1,050/t-$1,080/t, and the SN500 was hovering at $1,210/t-$1,250/t. Bright stock was assessed up by $30/t at $1,380/t-$1,420/t, all ex-tank Singapore.

Prices for the Group II 150 neutral moved up by $40/t to $1,200/t-$1,240/t, and the 500N edged up by $30/t to $1,260/t-$1,320/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was hovering at $990/t-$1,030/t, and the SN500 was steady at $1,100/t-$1,140/t. Bright stock increased by $20/t at the high end of the range to $1,180/t-1,240/t, FOB Asia.

The Group II 150N was holding at $1,000/t-$1,040/t FOB Asia, and the 500N and 600N cuts moved up by $20/t at the top end of the range to $1,060/t-$1,120/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 cSt 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.

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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