Crude oil futures remained volatile, having been on a downward trend for the previous three weeks and rebounding on Monday. Prices were generally lower than in January, when the average West Texas Intermediate (WTI) price was approximately $75.77 per barrel and Brent’s average price for the month was $79.27/bbl. While oil fluctuations do not get reflected in base oil pricing overnight, they do influence refining decisions and price direction. With crude values having increased during January, base oil producers had either raised offers or stood firm by their pricing because of feedstock pressure.

In contrast, buyers preferred to delay purchases in hopes that lower crude oil and feedstock values would lead to softer base stock pricing.

The one segment that appeared to buck this trend was the API Group I category, because prices seemed to be more influenced by a tight supply and demand ratio than by feedstock values. With several plant maintenance programs being completed or scheduled over the next few months, and several units having been shuttered permanently, global supplies have tightened. Demand for most Group I cuts hovered at healthy levels in Asia and the tighter conditions exerted upward pressure on pricing.

Group I bright stock was particularly sought-after for marine, railway and heavy-duty engine oil applications, as well as in the industrial and agricultural segments. Bright stock is unlike other Group I grades because it cannot be replaced with Group II cuts.

China continued to suffer from a structural deficit of heavy-viscosity grades, with Group I cuts becoming less prevalent after the permanent closure of several plants. As mentioned below, recent shutdowns and scheduled maintenance programs over the next few months were limiting the availability of Group I grades, while imports were deemed pricey given an uptick in values because of limited regional supplies, particularly from Southeast Asia. Nevertheless, Chinese buyers appeared willing to increase their bids in order to compete with other consumers for the limited cargoes that became available.

Group II grades were more accessible in China because of an increase in domestic Group II capacity over the last few years. However, this segment too will be affected by turnarounds during the next few weeks when plants undergo seasonal maintenance. If feedstock costs move up, there will be added incentive for producers to shut down for maintenance during a period of uncertain offtake from lubricant segments.

In the Group III category, there continued to be competition for market share between local producers and imports, mainly those from the Middle East. Domestic producers have been offering competitive pricing to maintain or gain market share. With several Group III plants scheduled for turnarounds in the next few months, there may be fewer cargoes moving to China, which would support steadier pricing.

In India, there continued to be interest in Group III cuts for those formulations that specifically require the high-performance base oils, but blenders generally prefer to acquire Group II cuts as prices are lower.

Group II availability from domestic refineries has grown and producers offer competitive prices, which has led many buyers to rely more heavily on local product versus imports. Prices for imported products were less attractive because of the depreciation of the local currency against the U.S. dollar.

Indian refiners who had so far been able to secure Russian oil at discounted prices will be affected by sanctions on Russian crude oil exports as they source oil from other origins. This was expected to result in higher production costs of refined products such as base oils as well.

In years past, India received numerous Group II cargoes from the U.S. during the last and first quarters of the year as U.S. suppliers tried to lower inventories and were able to place product in India. However, this has not been the case this year because of high U.S. prices and more strained availability from U.S. producers. This situation resulted from several factors: Some U.S. refiners have increased production of Group III grades to the detriment of Group II cuts, a supplier had suffered an unexpected production outage last November which reduced spot supplies, freight costs had gone up, and players faced difficulties in making the arbitrage work.

Group II supplies from South Korea were also more limited because of turnarounds and reduced operating rates at some plants due to refinery economics. Suppliers were keeping prices firm because of increased feedstock costs in January and buyers in India were cautious about securing product at steeper levels as they hoped prices would come down as crude oil values have softened.

Along similar lines as in China, Indian buyers have also started to rely more heavily on domestic production because of capacity expansions and steadier operating rates, although upcoming turnarounds may alter the balance.

Indian buyers were also striving to conclude business and replenish stocks ahead of the end of the fiscal year on March 31, which resulted in additional discussions. There has also been heightened buying interest for bright stock, sending import prices to higher levels, with numbers moving up by about $5 per metric ton on a CFR India basis.

Several cargoes were under discussion for shipment to India, including a 5,000-metric ton parcel expected to be lifted in Onsan, South Korea, for Mumbai in the second half of Feb. About 70,000 metric tons were being considered for shipment from Onsan to Mumbai and Kandla in the first half of March.

As mentioned above, some permanent plant closures and maintenance programs will be taking place over the next few months, crimping base oil availability.

In the Group I segment, PetroChina’s Dalian Petrochemical Group I plant in Liaoning province was shut down permanently in late 2024 due to the expected closure of the associated refinery in mid 2025 for its relocation. At the same time, there had been expectations that China National Petroleum Corporation/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.

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 has constrained 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. This plant has 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 end of the year. 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 these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the last three years.

Another outage expected to have some impact was the 10-day turnaround at the IRPC Group I plant in Thailand in May – and 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. (HPCL) was expected to start a partial Group I turnaround this month that may last until April.

Further down the road, it was heard that Thai Lube Base Oil PLC may be shutting down a lube base oil production unit from early July until mid-August.

Within the Group II segment, availability was balanced to long, but several turnarounds may also result in tight supply of certain grades.

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

Also in China, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant to commence in March.

There were also reports that South Korean producer GS Caltex was preparing for a 45-day turnaround at its Group II/Group III plant in Yeosu, starting later this month or early March, and was building inventories to cover term commitments during the outage.

Later this year, ExxonMobil hopes to bring additional Group II capacity online at its Singapore Resid Upgrade Project. The company plans to produce over one 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 EHC340 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, SK Enmove will also 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 the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in March.

Luberef will also be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for maintenance in the second or third quarter.

Prices

Crude oil futures edged up on Monday even as the market weighed the potential impact of additional U.S. tariffs on the global economy, as many of these measures were likely to upend current trading patterns and supply chains.

On February 10, Brent April 2025 futures were trading at $75.51 per barrel on the London-based ICE Futures Europe exchange, from $76.38/bbl on Feb. 3.

Dubai front month crude oil (Platts) financial futures for March 2025 settled at $74.92/bbl on the CME on Feb. 7, compared to $77.85/bbl for February futures on Jan. 31.

Spot base oil prices were mixed this week and were largely dependent on supply and demand factors. 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. The Group I solvent neutral 150 grade edged up by $10/t to $780-820/t, but the SN500 was steady at $1,040/t-1,080/t. Bright stock prices were assessed at $1,340/t-1,380/t, all ex-tank Singapore.

Prices for Group II 150 neutral slipped by $10/t to $840-880/t, but the 500N was unchanged at $1,060/t-1,100/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 held at $650/t-690/t on steady buying interest and snug availabilities, and SN500 hovered at $890/t-930/t. Bright stock prices climbed by $10/t to $1,170/t-1,210/t, FOB Asia on limited supplies.

Group II 150N hovered at $710/t-750/t FOB Asia, while 500N edged up by $10/t to $930/t-980/t FOB Asia.

In the Group III segment, 4 cSt held at $1,020-1,060/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.

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.