On Jan. 12, Brent March 2023 futures were trading at $83.73 per barrel on the London-based ICE Futures Europe exchange, from $78.62/bbl for February futures on Jan. 4.

Dubai front month crude oil (Platts) financial futures for February settled at $79.19 per barrel on the CME on Jan. 12, compared to $73.50/bbl on Jan. 4.

A certain amount of attention was focused on the current situation in China, as it is a key market in terms of base oil consumption. Buying interest in imports had waned in recent weeks due to uncertainties stemming from a chaotic reopening of the country following strict zero-COVID policies. Spiking infection numbers and an overwhelmed health system were weighing heavily on participants’ minds, although local authorities said that the infections may have peaked and the situation would improve in coming weeks. However, many residents expressed concern at the fact that millions of people travel during the Lunar New Year holiday, which this year falls at the end of January. This could lead to another wave of infections and reduced economic activity in the weeks following the holidays.

Nevertheless, those who maintained a more optimistic attitude expected base oil demand to increase following the Lunar New Year, coinciding with a couple of plant turnarounds taking place in Southeast Asia in the first quarter and likely leading to a tightening of supplies. Currently, a number of Chinese base oil plants were heard to be running at reduced rates due to the slump in demand at the end of the year. Perhaps in preparation for a pick-up in demand, a number of cargoeswere discussed for shipment to China, including a 2,000-metric-ton parcel for shipment from Cilacap, Indonesia, to Zhenjiang in the second half of February. A 1,000-ton parcel was mentioned for lifting in Daesan, South Korea, to Zhuhai in mid-February.

While API Group II cargoes appeared plentiful in Asia, Group I availability has tightened, particularly that of bright stock, lifting prices this week. Southeast Asia and Japan are the main sources of Group I in the region, but recent and upcoming plant closures were expected to exacerbate the tightening of this base oil segment moving forward.

A few cargoes originating in Southeast Asia were discussed this week, with a 3,200-ton lot mentioned for possible shipment from Singapore to Port Klang and Malacca, Malaysia, in mid-January. About 3,000 metric tons were quoted for shipment from Thailand to the United Arab Emirates this month as well.

Some South Korean cargoes were also being considered for shipment to Southeast Asian destinations, including a 7,300-ton lot from Yeosu to Singapore and Haiphong, Vietnam, in the first half of January. Around 2,000 metric tons were discussed for shipment from Onsan to Godau, Vietnam, in early February.

Asian cargoes were also expected to move to the Americas, where prices were still higher than at origin, despite posted price decreases implemented in the United States and weaker values in Latin America. A 3,000-5,000-ton cargo was mentioned for shipment from Onsan, South Korea, to New Orleans or Houston, the U.S., in February. A 7,000-ton lot was also heard to have been concluded from South Korea to West Coast South America.

In India, buyers maintained a cautious stance as price uncertainty lingered. Many consumers preferred to make do with existing inventories until more indications of where prices were heading emerged. Domestic supplies were deemed ample and plants were heard to be running well, with producers adjusting domestic prices down in recent weeks. Strengthening diesel prices might affect base oil supply as refiners often choose to redirect more feedstocks into the distillates stream and reduce base oil output, and light grades were heard to be tight at the moment.

Approximately 5,000 metric tons were being considered for shipment from Yeosu, South Korea, to Mumbai in the second half of February, and a second 5,000-ton cargo was on the table for shipment from Malacca to Chennai in the second half of January. A 9,000-ton cargo was in discussion for lifting in Cartagena, Spain, to Mumbai in mid-January. About 9,000 tons of base oils and solvents were quoted for lifting in Singapore to Kolkata, Kakinada, Ennore, Chennai and Chittagong, Bangladesh, in early February.

Spot base oil prices in Asia were mixed compared to the previous week as supply of some grades was more plentiful than others, and prices for some grades moved up, while others moved down. 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 saw some fluctuations week on week. Spot prices for the Group I solvent neutral 150 grade were unchanged at $940/t-$970/t, and the SN500 was also steady at $1,050/t-$1,090/t, but bright stock moved up by $50/t to $1,280/t-$1,320/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were assessed lower by $20/t at $990/t-$1,030/t, and the 500N was also lower by $20 at $1,030/t-$1,080/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged at $810/t-$850/t, but the SN500 was slightly lower by $10/t at $820/t-$860/t. Bright stock prices jumped by $40-50/t to $1,040/t-1,080/t, FOB Asia.

The Group II 150N was assessed at $820/t-$860/t FOB Asia, and the 500N and 600N cuts were down by $10/t at $830/t-$860/t, FOB Asia.

In the Group III segment, prices were stable. The 4 centiStoke was assessed at $1,520-$1,560/t, and the 6 cSt was steady at $1,490/t-$1,530/t. The 8 cSt grade was holding 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.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.