Weekly Asia Base Oil Price Report

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On the surface, the base oils market was fairly quiet during the Lunar New Year holidays, but there was underlying tension and uncertainty due to the imposition of new tariffs by the United States’ president on Chinese imports, as well as on goods from Canada and Mexico. Base oil trading was expected to gradually pick up in Asia this week, as participants return to business and start to discuss March shipments following the holidays, although negotiations were not expected to be in full swing until next week.

The government in Beijing said it would file a lawsuit against the U.S. at the World Trade Organization and retaliate with duties on U.S. imports. It was not yet clear what the ramifications of the new duties would be for the base oils and lubricants industry, but many U.S. manufacturers source raw materials from China and expect to be affected by the trade war.

The U.S. imports large volumes of crude oil and refined products from Canada and Mexico, as well. Trump ordered a 10% tariff on Canadian oil and 25% tariffs on Mexican energy imports, which means U.S. refineries will face higher costs to make everything from gasoline and diesel to jet fuel. This might provide Asian and European refineries a competitive advantage against their U.S. counterparts, Reuters reported.

Crude oil futures had slipped during the last week of January, but jumped on Monday after the tariffs were announced. Higher crude oil and feedstock prices may exert pressure on base oils, and the ongoing price volatility made base oil participants adopt a wait-and-see position.

Buyers preferred to delay purchases in hopes that base oil prices might stabilize, although some grades were more influenced by supply and demand factors than by feedstock values. This was the case of API Group I grades, which got support from a tight supply and demand balance in Asia.

Steady demand for Group I cuts against dwindling supplies because of planned and unplanned turnarounds and permanent plant closures have resulted in tight availability of most Group I cuts, with bright stock in particular seeing prices climb. Conversely, there has been some downward pressure on the heavy-viscosity solvent neutral 500 due to lower demand as this grade can be replaced with the Group II 500 neutral, which has been widely available at competitive levels.

Activity in China was not expected to revive until next week as many businesses were likely to be closed for several more days due to the Lunar New Year celebrations, but certain conditions that had affected the market before the holidays were anticipated to persist. A tight domestic and regional Group I supply and demand scenario was likely to impact price decisions over the next several weeks, for example.

As previously reported, the permanent closure of PetroChina’s Dalian Petrochemical Group I plant in Liaoning province in late 2024 and closure of the associated refinery in mid-2025 for relocation was anticipated to tighten the Group I supply-demand balance. At the same time, there had been expectations that PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils that would likely help offset the Dalian closure, market sources said. Fushun has not yet confirmed the Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 metric tons per year. Fushun was expected to have a six- to eight-week turnaround in late Q2 or early Q3 2025, according to sources.

Other closures and turnarounds will likely impact Group I availability in the region. In Indonesia, the Pertamina Group I plant in Cilacap was expected to undergo maintenance work from mid January until mid February, according to reports. This might limit the volumes available for export from this facility.

In Japan, tight Group I conditions persisted after the extended shutdown of Idemitsu Kosan’s Group I unit in Chiba following a fire at the lubricating oil production facility in mid-2024, with a restart expected last December. The plant had been scheduled for a turnaround in May. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program, which began in September 2024 and was completed at year end. Eneos also plans to complete maintenance at its Kainan and Mizushima plants this year. The Mizushima B plant will be shut down this month for an extended turnaround that will last until May. All of these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the last three years.

Another outage that was expected to have some impact was the ten-day turnaround at the IRPC Group I plant in Thailand in May, but preparations for the shutdown may coincide with a seasonal demand increase. While the producer was likely to build inventories ahead of the outage to meet term obligations, it was likely to prioritize domestic commitments and reduce volumes offered for spot business.

In India, Hindustan Petroleum Corp. Ltd. was expected to start a partial Group I turnaround this month that may last until April.

Availability of Group II grades was deemed more plentiful than the Group I cuts, but a number of turnarounds may also result in tight supply pockets. Additionally, South Korean producers were heard to have been running plants at reduced rates due to sluggish demand and squeezed margins against high production costs.

In China, an unplanned outage at the CNOOC Group II unit in Huizhou might also impact availability in the domestic market.

There were also reports that South Korean producer GS Caltex was preparing for a forty-five day turnaround at its Group II and Group III plant in Yeosu, starting later this month or early March, and was building inventories to cover term commitments during the outage.

A number of South Korean cargoes were being discussed for shipment this month, with two lots of approximately 1,000 tons each mentioned for shipment from Onsan to Zhangjiagang, China, in February. A 1,300-ton parcel was also expected to be shipped from Onsan to Huizhou, China, this month. A 1,500-ton cargo was on the table for lifting in Onsan to Merak, Indonesia, in February as well. A 2,500-ton lot was also quoted for shipment from Onsan to Tuas, Singapore, in February.

The sole Group II producer in Taiwan, Formosa Petrochemical, had reportedly reduced its base oil production in favor of heightened fuel output last month, but base oil production rates were expected to have been ramped up.

Later this year, ExxonMobil hopes to bring additional Group II capacity on line at its Singapore Resid upgrade project. The company plans to produce more than 1 million tons per year of Group II high-performance base stocks and will be launching a similar product to Group I bright stock, but within the Group II family, marketed under the brand name EHC 340 Max. The upgrade project will also allow the company to offer additional supplies of the EHC 50 base stock and introduce the EHC 120 cut to the Asia Pacific region.

In the Group III segment, prices were static as there were no strong conditions tilting the balance in one particular direction, although producers kept a close eye on crude oil and feedstock prices. Increased Group III domestic capacity in China kept some import barrels away as buyers opted for securing locally-produced base oils at competitive prices. Additional offers were anticipated to emerge in the coming weeks for Middle East and South Korean cargoes, but it was not clear whether prices would be adjusted.

SK Enmove will be completing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In India, consumers have adopted a cautious attitude and preferred to monitor feedstock price fluctuations before acquiring additional volumes or venturing out into the spot arena. Newly imposed sanctions on Russian crude oil exports meant that Indian refiners needed to acquire oil from other sources at steeper prices. This was expected to place pressure on refined products such as base oils.

Most term commitments were being met without disruptions and domestic supplies fulfilled a large portion of product needs, without exposing buyers to freight cost changes, long lead times and other risks. With vessels now able to navigate the Suez Canal because of a reduced threat of Houthi rebel attacks, freight rates on long-haul routes were expected to come down.

Along similar lines to what was occuring in other areas, Group I imports were less readily available in India, with bright stock in particular being exposed to upward pressure due to tighter availability. Domestic supplies of most Group I grades was deemed ample and this kept increases for these grades at bay.

Group II negotiations were anticipated to pick up in India over the next two weeks, with upcoming regional turnarounds and steady demand expected to impact pricing. Unlike the previous year, there were fewer offers of competitively priced U.S. products because the rupee weakened against the dollar and U.S. base oils surplus was also more limited. Group II offers from South Korea were slightly more sparse because of steeper feedstock costs in January, reduced rates at some plants and upcoming maintenance programs.

In terms of shipments to India, a 3,000-4,000-ton cargo was on the table for shipment from the UAE to West Coast India in early February. About 4,000 tons were also being considered for shipment from Ruwais, UAE, to Mumbai between Feb. 10-20. A 3,000-ton parcel was mentioned for lifting in Daesan, South Korea, to East Coast India between Feb. 1-10. Details emerged about a 3,000-ton lot that was loaded in Cartagena, Spain, to Mumbai in late November or early December on the Stolt Sagaland.

Prices

Crude oil futures jumped on Monday as the U.S. slapped hefty tariffs on a range of imports, including crude from Canada and Mexico, with West Texas Intermediate jumping to around $74 per barrel and Brent to above $76/bbl. The U.S. gets most of its oil imports from Canada, as well as about 500,000 barrels a day from Mexico.

On Feb. 3, Brent April 2025 futures were trading at $76.38/bbl on the London-based ICE Futures Europe exchange, from $78.43/bbl for March futures on Jan. 27.

Dubai front month crude oil (Platts) financial futures for February 2025 settled at $77.85/bbl on the CME on Jan. 31, compared to $79.76/bbl on Jan. 24.

Spot base oil prices were mixed, with Group I SN500 edging down slightly on lengthening supply and bright stock moving up on tight availability. 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 firm from a week ago on tighter supplies of Group I bright stock. Group I solvent neutral 150 grade was assessed at $770/t-810/t, and SN500 hovered at $1,040/t-1,080/t. Bright stock prices were notionally adjusted up by $10/t to $1,340/t-1,380/t, all ex-tank Singapore.

Prices for Group II 150 neutral were steady at $850/t-890/t and 500N was unchanged at $1,060/t-1,100/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was steady at $650/t-690/t on healthy buying interest and tighter availabilities, but the SN500 was adjusted down by $10/t to $890/t-930/t on weaker supply-demand factors. Bright stock prices climbed by $10/t to $1,160/t-1,200/t, FOB Asia on strained supply.

Group II 150N hovered at $710/t-750/t FOB Asia, while the 500N was assessed at $920/t-970/t FOB Asia.

In the Group III segment, 4 cSt held at $1,020/t-1,060/t and 6 cSt was also steady at $1,050/t-1,090/t. The 8 cSt cut was assessed at $950/t-990/t on muted activity.

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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