Asia Base Oil Price Report


The return to the trading scene of buyers who had delayed purchases for as long as possible in hopes of lower pricing, along with reduced production rates at some base oil plants and recent export activity lent support to current spot prices. Base oil values were generally reported as stable to slightly firmer as availability of certain grades has tightened.

Base oil prices had started to decline in late July after a steady climb since the start of the year as demand in many Asian markets had begun to soften, leading to a gradual increase in supplies. The prospect of a global recession – which could potentially result in reduced industrial activity and automotive sales – was expected to impact demand for lubricants and base oils. Consumption in key markets such as China and India also became more lackluster due to COVID-related lockdowns in the case of China and the start of the monsoon season in India’s case.

At the time, Brent crude oil prices were hovering at around $107 per barrel (on July 28), but they had slipped to levels around $96/bbl by early August. This factor, together with growing base oil supplies on a global scale, exerted pressure on base oil prices, and offered buyers an argument to negotiate lower pricing with their suppliers. However, the downward price trend appears to have stalled, and in fact, prices for certain base oil grades have seen a rebound.

Crude oil values still remained volatile given the ongoing Russian war on Ukraine and a tug-of-war between members of the OPEC+, who threatened to decrease output in order to bolster pricing, and those nations who depend heavily on crude oil imports and preferred to see higher output levels. Analysts also expected the deepening economic slowdown in China to lead to significantly reduced oil demand in the fourth quarter.

Crude oil futures edged up by 1% on Wednesday as the International Energy Agency anticipated an increase in gas-to-oil switching due to high prices this winter, even though the outlook for worldwide oil demand remained downcast, Reuters reported.

On Sept. 15, Brent November futures were trading at $93.47 per barrel on the London-based ICE Futures Europe exchange, from $88.55/bbl on Sep. 8.

Dubai front month crude oil (Platts) financial futures for October settled at $90.64 per barrel on the CME on Sep. 14, compared to $90.02 on Sep. 7.

Newly imposed COVID-related lockdowns in China triggered concerns about a decrease in the consumption of crude oil and other refined products. The movement restrictions on a large portion of the population would inevitably lead to reduced demand for fuels, lubricants and base oils, sources said. Uncertainties related to the economic welfare of the country also dampened demand, although some pockets of the base oils market have seen increased activity. This was partly attributed to the need to replenish stocks and concerns that prices might edge higher following the Golden Week holiday celebrated in China on Oct. 1-7.

Most of the current base oil requirements were being met through base stocks produced in China, but imports from Thailand, South Korea, Taiwan and Singapore continued to pour in. Several API Group I cargoes of Thai origin were heard to have been secured for shipment in September, and prices have increased. The influx of Thai cargoes may be affected by an upcoming turnaround at a Thai facility in October, which was expected to result in reduced availability. It was unclear whether local availability of Group I volumes would be sufficient to meet requirements, particularly of bright stock. The Chinese government has made a concerted effort to reduce the number of Group I refineries in recent years due to environmental concerns, and this has led to a deficit of certain base stocks.

There also appeared to be some surplus material in China that was offered up for export, with a 4,600-metric ton cargo being discussed for shipment from Shanghai to Mumbai, India, or Hamriyah, United Arab Emirates, in the second half of September or the first half of October.

Strong interest for Northeast Asian product continued to be noted in Latin America, with a small cargo being discussed for prompt shipment from Ulsan, South Korea, to Guayaquil, Ecuador. These types of transactions were sometimes difficult to finalize due to high freight rates and logistical issues like a lack of vessel space on certain routes. However, some parcels did manage to change hands and were expected to be on their way this month and the next. There have also been loading delays reported in South Korean and Taiwanese ports due to Typhoon Hinnamnor last week, which caused flooding and claimed several lives.

This week, a number of cities in China braced for a direct hit of Typhoon Muifa as the weather system moved towards China’s east coast on Thursday. Major ports in Shanghai and Ningbo suspended operations and liquefied natural gas import terminals in Ningbo, Zhoushan island and Jiangsu province were also shut. Zhoushan port is home to some of China’s largest oil storage tanks and refineries, the South China Morning Post reported.

In India, demand has also started to pick up, with the heavy grades enjoying renewed interest and tightening up. However, suppliers were facing challenges when they tried to increase offer levels, as Indian buyers dug in their heels and did not appear willing to accept these numbers. Their position may change as supplies of the heavy grades were described as strained, and several Asian refiners have dialed down production rates given an earlier oversupply situation. This would give sellers more leverage to push for higher prices.

Supplies of light grades arriving in India from Northeast Asia during September were anticipated to meet much of the demand for these cuts, while domestic supplies were also quite abundant, but it was not clear whether similar volumes have been lined up for October arrival. Around 15,000 metric tons were anticipated to be shipped from Mailiao, Taiwan, to Mumbai this week. Another 10,000 metric tons were being discussed for shipment from Ras Laffan, United Arab Emirates, and/or Sitra, Bahrain, to West Coast India in early October.

Spot base oil prices were stable to firm this week, with some of the ranges seeing small upward adjustments on higher bid and offer levels. The 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 slightly firmer week on week. Spot prices for the Group I solvent neutral 150 grade edged up by $20/t at $1,020/t-$1,050/t, and the SN500 to $1,210/t-$1,250/t. Bright stock also moved up by $20/t to $1,280/t-$1,320/t, all ex-tank Singapore.

Prices for the Group II 150 neutral was assessed higher by $20/t at $1,140/t-$1,180/t, while the 500N was holding at $1,170/t-$1,210/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 advanced by $20/t to $870/t-$910/t, and the SN500 was unchanged at $990/t-$1,030/t on a lack of reported transactions. Bright stock prices were hovering at $990/t-1,040/t, FOB Asia.

The Group II 150N was steady at $950/t-$990/t FOB Asia, and the 500N and 600N cuts were also unchanged at $1,020/t-$1,070/t, FOB Asia range.

In the Group III segment, prices were largely unchanged from last week. The 4 centiStoke was assessed at $1,510-$1,550/t, and the 6 cSt at $1,490/t-$1,530/t. The 8 cSt grade was hovering at $1,210-1,250/t, 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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