On Oct. 13, Brent December futures were trading at $92.50 per barrel on the London-based ICE Futures Europe exchange, from $93.17/bbl on Oct. 6.

Dubai front month crude oil (Platts) financial futures for November settled at $88.84 per barrel on the CME on Oct. 12, compared to $89.89 on Oct. 5.

Activity in China slowed down last week due to the Golden Week or National Day holidays celebrated Oct. 1-7, and the country’s attention has now turned to the National Congress of the Chinese Communist Party, scheduled to start on Oct. 16, where Xi Jinping was expected to be confirmed as the country’s president for a third term.

Xi’s fanatical adherence to a zero-COVID policy has led to lockdowns in major cities, the shuttering of factories as millions of people have been unable to work, and major transportation and supply chain disruptions as ships carrying goods have been unable to load or unload and major ports were closed for extended periods. The World Bank has identified the supply-chain disruptions stemming from lockdowns in China as one of the driving forces behind a fall in global growth – forecast this year at 2.9%, down from 5.7% in 2021, Time.com reported.

The lockdowns have also led to reduced Chinese gasoline and lubricants consumption, and consequently, lower base oils demand. Several base oil plants have been shut down temporarily for maintenance or were running at reduced rates in the country, according to reports. There was still keen buying interest for imports of high-viscosity grades, including bright stock, as there is an endemic deficit of these cuts in China, but values have come under pressure as they need to compete with domestic supplies.

There were expectations of an increased influx of heavy grades from Taiwan to China this month, even though Taiwanese shipments had seen a drop in the previous months as the sole API Group II producer in Taiwan has increased its availability. There were also discussions of cargoes moving from South Korea and Southeast Asia, with 1,400 metric tons mentioned for lifting in Onsan, South Korea, to Tianjin in late October and 5,500 metric tons made up of two grades expected to be shipped from Daesan, South Korea, to Tianjin and Zhapu in mid Nov. About 3,000 metric tons were likely to be shipped from Rayong, Thailand, to Nantong in late October/early November.

Another factor that was placing downward pressure on base oil prices was the softer pricing in other regions, because base stock values have weakened on the back of slowing demand and growing supply levels in Europe, the Americas, the Middle East and Africa. Asian suppliers had been pursuing opportunities to export surplus barrels to more distant destinations, but lower values in those areas, together with plentiful supplies in some of them and steep freight rates, challenged their export efforts.

Nevertheless, South Korean, Taiwanese and Southeast Asian producers have been able to place product within Asia and in other regions to some extent, although they were only able to achieve this as they acquiesced to lower prices.

Both bids and offers have fallen week on week and this was reflected in this week’s spot prices. A 1,000-metric ton cargo was being discussed for shipment from Yeosu, South Korea, to Vietnam in mid-November. A 4,000-metric ton lot was also mentioned for lifting in Yeosu to the United States Gulf Coast in November. Another 4,000 metric ton parcel was on the table for shipment from Ulsan, South Korea, to Singapore this month. A 3,400-metric-ton cargo was quoted for shipment from Onsan, South Korea, to Huizhou, China, and Ho Chi Minh, Vietnam, the first week of November.

Thai and Japanese Group I availability was expected to tighten as a number of base oil plants have embarked on turnarounds this month or are being shut down permanently, but there were a few spot cargoes still being discussed. The Eneos Group I plant in Negishi, Japan, will be decommissioned, with the process to shut down the associated refinery at that location starting in late September. The refinery will be shuttered due to a steady reduction in demand for refined products and lubricants in Japan over the last few years. Two Thai base oil units will be completing maintenance this month and one of them will not be restarted until late November.

A Singapore-based producer has lowered its ex-tank prices, with its Group I solvent neutral 150 and SN500 being adjusted down by $60 per metric ton, and its Group I bright stock and Group II 150N and 500N undergoing $80/t reductions in the first week of October. Adjustments from this supplier are generally seen as a bellwether of price trends in the region.

In India, consumers proceeded with caution in terms of how much product to acquire and what price levels to accept. They were generally more comfortable relying on domestic product, as local suppliers have dropped prices in October, and favored volumes purchased under term contracts, instead of venturing out into the spot market. The demand outlook was also uncertain, following a few months of subdued conditions due to the monsoon season. There were also some import cargoes expected to arrive mainly from Northeast Asia and the Middle East this month, which were purchased a few weeks ago, adding to the impression that availability was plentiful and that it was not necessary to jump at the first offer buyers received.

Given the conditions described above, Asian spot base oil prices were stable to softer this week. 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 have mostly fallen on lower bids and offers and a major supplier’s price drops. Spot prices for the Group I solvent neutral 150 grade were down by $20/t at $980/t-$1,010/t, and the SN500 fell by $50/t to $1,100/t-$1,140/t. Bright stock was lower by $10/t at $1,240/t-$1,280/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed lower by $20/t at $1,090/t-$1,130/t, while the 500N was also down by $20/t at $1,120/t-$1,160/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 edged down by $20/t to $830/t-$870/t, and the SN500 fell by $40/t to $900/t-$940/t. Bright stock prices slipped by $10/t to $970/t-1,020/t, FOB Asia.

The Group II 150N edged down by $20/t to $880/t-$920/t FOB Asia, and the 500N and 600N cuts were assessed lower by $40/t at $920/t-$970/t, FOB Asia.

In the Group III segment, prices were steady. The 4 centiStoke was assessed at $1,530-$1,570/t, and the 6 cSt was holding at $1,490/t-$1,530/t. The 8 cSt grade was heard at $1,210-1,250/t, FOB Asia, for fully approved product.

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.

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