Availability of Group I cuts was also impacted by several turnarounds taking place in the region over the last few weeks, and the situation may be exacerbated by an upcoming turnaround at the Thai Group I plant early next year. The turnaround was expected to last for approximately two months. In view of the expected tightening of Group I supplies – bright stock in particular – it was heard that Chinese distributors and importers have raised their prices.

The tighter supply as a result of the turnaround at the local plant might offset an activity slowdown in Thailand triggered by economic uncertainties and high household debt, which is squeezing auto loans in the country, according to Nikkei Asia. Thailand’s auto sales fell 28% in the third quarter from a year earlier, bucking the regional trend where other major markets all recorded increased growth, the online publication reported.

The tighter conditions for the Group I grades in Asia may also see some relief from additional export cargoes from China, as a local producer was planning to export Group I light and heavy grades, but no bright stock. The heavy grades are usually short in China and therefore more of the light grades may be available, but buyers seemed to be hesitant about acquiring Chinese product that may not meet the required specifications.

Meanwhile, in Indonesia, it was heard that Pertamina had started a turnaround at its Cilacap Group I unit in mid October that was expected to be completed in the first part of November.

In Japan, Idemitsu’s Group I plant was offline following a fire last July and it was not likely to be restarted until the end of the year. A two-month turnaround at the Cosmo Oil unit in Yokkaichi that started in late September was expected to be completed next month. One of Eneos’ Group I units in Mizushima was scheduled to be shut down for a three-month maintenance program in the first quarter of 2025. There was no direct producer confirmation about the shutdowns.

With a number of recent turnarounds having been completed, consumers hoped to see a gradual increase in product availability in the region. In South Korea, S-Oil was understood to have wrapped up a turnaround at its Group I and Group II units in Onsan which started in mid September. The producer has continued to meet its contractual obligations, but had suspended spot offers during the shutdown. Group III cuts were not expected to have been affected.

In India, the Group I/Group II plant of Indian Oil Corporation Limited in Haldia had undergone a scheduled turnaround since August, but the unit was heard to have been restarted. Also in India, CPCL embarked on a brief shutdown on its Group I unit in Chennai in late October.

Operations at Dalian Petrochemical’s Group I plant in China were expected to cease before the end of the year as the company will be shutting down the affiliated refinery by mid 2025. The producer might replace the existing refinery with a new, smaller facility. The shutdown may result in an increased tightening of an already strained supply of Group I grades.

Looking down the road, GS Caltex was heard to be planning to conduct a turnaround at its Group II/Group III plant in Yeosu from March to April 2025. A Group I unit in Japan was also anticipated to start an extended turnaround in the first quarter of 2025, but further shutdown details were unavailable.

The Group II segment has lengthened in Asia, although some of the heavier cuts appeared to be less readily available than their lighter counterparts, but the light-viscosity grades see more demand during the colder winter months in some countries.

There has been an uptick in buying interest in Group II grades in Southeast Asia, and this was supporting current price ideas. While some buyers were interested in securing cargoes, a few were more cautious because of uncertainties in downstream lubricant activity.

In China, lubricant demand has weakened, particularly from the automotive segment, and this led to sagging base oil consumption. The country’s factory output growth slowed last month and demand woes in its property sector showed few signs of abating, fueling investors’ concerns over the economic and industrial health of the world’s largest crude importer in Asia, Mint.com reported.

Domestic Group II suppliers in China have decreased prices to attract business and reduce inventories. The growing supply levels have prompted a number of refiners to cut back operating rates and a producer was also heard to be planning to shut down its plant in December.

The Group III cuts were generally plentiful in the region and prices have moved down, but the lower indications have not necessarily spurred additional demand. Availability of the 4 cSt cut was more abundant than for the other grades as consumption in downstream applications has subsided and production rates for this grade was fairly high. Prices for the 6 cSt grade were steady as this cut sees more limited production. Demand for the Group III grades in Europe and the U.S. has also abated and as a result, additional South Korean and Middle Eastern cargoes were anticipated to become available.

The current Group III situation has incentivized a Group III refiner in China to lower its production rates, while a second producer’s plant that had been undergoing a turnaround has been restarted. Availability of Group III grades seemed to be outpacing demand and domestic prices have therefore been adjusted down as suppliers tried to maintain market share.

China has also been receiving fewer Group II volumes from Taiwan, and the sole Taiwanese producer has been actively shipping cargoes to other destinations in Asia, Africa and the Middle East. A 6,000-metric ton cargo was mentioned for possible shipment from Taiwan to Hamriyah, United Arab Emirates, at the end of December. A 5,000-6,000-ton lot was quoted for possible shipment from Mailiao to Lagos, Nigeria, this month.

In India, lubricant demand has improved, following the monsoons and the Diwali festive season. Industrial and automotive activities have picked up the pace, resulting in additional demand for base oils and lubricants. Some buyers’ inventories have also been depleted during the monsoon season and they were therefore expected to return to the market to secure fresh volumes. Base oil imports to India had already risen in October compared to the same month last year in preparation for an uptick in base oils demand.

Discussions for Group I bright stock cargoes remained brisk as demand for this grade has ticked up and offers were limited. Import prices on a CFR India basis for both the SN500 grade and bright stock have edged up by $10 per metric ton week on week.

Conversely, Group II import prices were under downward pressure because of competition with domestic supply, with values seeing decreases of around $5-10/t CFR India. There were expectations that additional supply would become available as a South Korean plant turnaround has been completed and there were discussions to move U.S. cargoes to India in December, but those would not be arriving until one to two months later. Furthermore, prices for these cargoes of light grades faced competition from domestic supplies.

Group III availability was deemed more than sufficient to meet current demand in India, but trading has been thin. Import prices have therefore seen little fluctuation, although they remained exposed to downward pressure as overall supply has increased given that demand at destinations such as the U.S. and Europe has declined. Just like in other countries, the 4 cSt grade was more plentiful and spot prices were therefore under more pressure than values for the other grades.

Several base oil parcels were being discussed for shipment to India, with about 12,000 tons to 18,000 tons expected to be shipped from Yanbu and Jeddah, Saudi Arabia, to Mumbai and Hazira in late November. A 5,000-ton lot was quoted for lifting in La Plata, Argentina, to Mumbai between November 20 and December 10. A 1,500-ton parcel was on the table for shipment from Rayong, Thailand, to West Coast India in the second half of December. A 5,000-ton cargo was looking to be shipped from Shanghai to Mumbai and Kandla in mid November. A 10,000-ton lot was mentioned for possible shipment from Daesan, South Korea, to the West Coast India in the first half of December.

Separately, a number of other South Korean cargoes were being discussed, with a 4,000-ton cargo expected to be shipped from Yeosu to Gebze, Turkey, in the second half of November. A 1,300-ton parcel was mentioned for lifting in Onsan to Merak, Indonesia, in early December. About 4,000-6,000 tons were anticipated to be shipped from Yeosu to Dong Nai, Vietnam, and Pasir Gudang, Malaysia, in mid November.

Crude

Crude oil futures continued on a downward trend, with values seeing sharp drops last week on the sedate pace of the U.S. Federal Reserve rate cuts and weaker Chinese oil demand, which was expected to be further impacted by U.S. president-elect Donald Trump’s plan for tariffs on trade with China.

On November 18, Brent January 2025 futures were trading at $71.03 per barrel on the London-based ICE Futures Europe exchange, from $73.63/bbl on November 11.

Dubai front month crude oil (Platts) financial futures for December 2024 settled at $69.98/bbl on the CME on November 15, from $72.72/bbl on November 8.

Prices

Spot base oil prices were mixed as diverging trends affected the various grades, depending on supply and demand conditions. 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 generally steady to soft. Group I solvent neutral 150 grade was heard to have moved down by $20/t to $800-840/t, but the SN500 held at $1,040-1,080/t. Bright stock prices were steady at $1,290-1,330/t, all ex-tank Singapore.

Prices for Group II 150 neutral were assessed at $860-900/t and 500N was also unchanged at $1,060-1,100/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was lower by $10/t at $650-690/t, but the SN500 was up by $10/t at $910-950/t. Bright stock prices were firm at $1,090-1,140/t, FOB Asia.

Group II 150N was assessed down by $10/t at $710-750/t FOB Asia, but 500N held at $920-960/t FOB Asia.

In the Group III segment, the 4 cSt grade remained exposed to downward pressure due to oversupply and was assessed down by $10/t at $1,030-1,070/t. But the 6 cSt was unchanged at $1,060-1,100/t. The 8 cSt cut was gauged down by $10/t at $960-1,000/t.

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.