Asia Base Oil Price Report


Spot base oil prices seemed to have stabilized for the time being, despite demand picking up in a few countries and declining in others. Recent efforts by suppliers to trim production rates and find a home for surplus barrels have been fairly successful, relieving some of the inventory pressure. In China, most COVID-related restrictions have been lifted, but there has been a spike in the number of infections and people preferred to stay home, resulting in reduced economic activity and fuel consumption.

The Chinese government’s sudden drop of its zero-COVID policies amidst widespread protests was somewhat perplexing, and instead of encouraging increased economic activity, it seemed to have done the opposite. People chose to stay at home because they were afraid of infection and not being able to get treatment as the healthcare system showed signs of being overwhelmed. The abrupt policy changes have resulted in reduced mobility of the population and a slowdown in industrial activity. This has affected fuel and lubricants demand, feeding concerns about base oil consumption in the next few weeks. Buyers have adopted a wait-and-see position and were expected to return to the market at a later date, perhaps before the Lunar New Year holidays in late January.

Buying activity has also declined in India and prices were under pressure, although there were some segments of the market that enjoyed healthier demand and pricing. This applied to the light grades in particular, as buyers sought to secure barrels in connection to firm diesel values. Demand for bright stock, on the other hand, has weakened given ample domestic availability and steady production.

In terms of imports, it was heard that a Spanish cargo was being considered for late December lifting to India. Shipments from Europe had been less common in recent months due to the price gap between regions, high freight rates and difficulties in finding vessel space. Details emerged about a 13,000 metric tons cargo that was shipped from Yanbu, Saudi Arabia, to Karachi, Hazira and Mumbai in late November. About 10,000-20,000 metric tons were discussed for lifting in Daesan and/or Pyongtaek and/or Kunsan, South Korea, to West Coast India between Dec. 20 and Jan. 15.

Despite expectations of increased buying activity in the first quarter of 2023, Asian suppliers seemed in a hurry to conclude business before the year-end holidays and a good number of shipping inquiries surfaced as a result. Many of the shipments involved South Korean product, which might see some delays due to a recent truck driver strike that was eventually lifted as the Korean government threatened action against the strikers.

Approximately 5,000-8,000 metric tons being considered for shipment from Daesan and Ulsan to Singapore and Port Klang, Malaysia, in the second half of January. A 5,000-metric ton cargo was also discussed for shipment from Yeosu to Hamriyah, United Arab Emirates, in late Dec. A 7,000-ton lot was on the table for shipment from Korea to Ecuador in early Jan. A 1,000-ton parcel of two grades was heard for shipment from Onsan to Karachi, Pakistan, the first week of January. Another 3,000 metric tons were also mentioned for shipment from Pyongtaek to Karachi in the second half of December. A 1,600-ton parcel was quoted from Onsan to Bangkok and Koh Sichang, Thailand, in end Dec. A second 3,000-tons lot was discussed for shipment from Onsan to Savannah, United States, in mid Jan.

The API Group I supply situation has started to improve in Southeast Asia with the return to production of a Thai facility, following a turnaround, coupled with declining demand from buyers who were amply supplied and were concerned that prices would fall, leaving them holding pricey inventories. There were several cargoes under discussion for shipment from Southeast Asia to destinations within Asia and the Middle East. A 9,000-ton cargo was mentioned for lifting in Dumai, Indonesia, to Tianjin, China, and Ulsan, South Korea, possibly for intra-company business. A 6,000-ton cargo was also discussed for shipment from Singapore or Thailand to Mumbai in mid-Jan.

Recent Group II price reductions by suppliers to encourage orders seemed to have been somewhat counterproductive, since the lower offers had fed buyers’ concerns that prices may have room to move down even further. This situation had discouraged consumers from securing additional cargoes and had prompted them to wait for lower pricing. However, suppliers appeared unwilling to adjust prices down further, especially as crude oil prices have reversed course and strengthened during the week.

Spot base oil prices were generally steady from the previous week, but a couple of ex-tank Singapore assessments underwent small downward adjustments. The price 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 steady to weaker week on week. Spot prices for the Group I solvent neutral 150 grade were heard down by $20/t at $960/t-$990/t, while the SN 500 was down by $10/t at $1,070/t-$1,110/t. Bright stock was holding at $1,250/t-$1,290/t, all ex-tank Singapore.

Prices for the Group II 150 neutral dropped by $10/t to $1,030/t-$1,070/t, but the 500N was unchanged at $1,080/t-$1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $830/t-$870/t, and the SN500 at $880/t-$920/t. Bright stock prices were stable at $990/t-1,040/t, FOB Asia.

The Group II 150N was assessed at $890/t-$930/t FOB Asia, and the 500N and 600N cuts were steady at $940/t-$970/t, FOB Asia.

In the Group III segment, prices were largely stable. 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.

Upstream, crude oil prices climbed during the week as OPEC and the International Energy Agency forecast an uptick in oil demand for 2023. An easing by the U.S. Federal Reserve of interest rate hikes and slowing inflation boosted prices as well. Expectations of higher crude demand in China following the relaxation of COVID restrictions also helped push prices higher, although a rise in infections may cap demand levels. The shutdown of the Keystone pipeline between Canada and the U.S. last weekend added upward pressure.

Contrary to expectations, the price cap on Russian crude exports that came into effect last week has not elicited any dramatic response from the Kremlin, reported.

On Dec. 15, Brent February 2023 futures were trading at $81.21 per barrel on the London-based ICE Futures Europe exchange, from $76.52/bbl on Dec. 8.

Dubai front month crude oil (Platts) financial futures for January settled at $77.86 per barrel on the CME on Dec. 14, compared to $70.89/bbl on Dec. 7.

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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