Accessibility to lower-priced Russian crude oil has decreased for India, as the West has tightened sanctions on Russian exports because of its attack on Ukraine. Russian crude exports to India sank to a two-year low in February, according to Bloomberg, which was referring to data published by Kpler. Indian imports of Russian crude fell to 1.4 million barrels per day in February, down by 14.9% compared with January, according to the data. This was driving refining costs higher and impacting decisions such as run rates and the slate of products that were the most profitable. Base oil margins were generally deemed attractive compared to competing fuels.

Higher prices for the heavy base oil grades were most evident in key markets such as India and China, where buyers seemed more anxious about securing enough product to meet improving demand and appeared willing to accept higher offers. Prices for some cuts, such as the API Group III grades, had been fairly steady, but have been seized by the upward momentum as tighter conditions were also expected in this segment.

In China, importers have been working hard at obtaining Group I material, given that the country is structurally short on Group I grades, and regional supply has dwindled. Bright stock was once again in the spotlight, with requirements from the industrial, agricultural, heavy duty, marine, and railway sectors remaining fairly robust and local production proving to be insufficient to meet demand. Prices have edged up and buyers have acquiesced to the higher values in order to secure supplies as there were few options available, and competition with buyers from other countries has intensified.

Indonesian Group I producer Pertamina, whose plant underwent maintenance work in February, limited its spot offers, and buyers turned to Thai supplies. However, a large portion of production is allotted to domestic consumers, leaving less for export. Furthermore, there has been some resistance to a Thai supplier’s effort to sell bright stock in combination with the solvent neutral 500 grade.

Group II base oils were slightly more available, but the heavy grades were still a problem as they were in high demand against strained supplies and this supported steeper pricing. With a South Korean Group II producer starting a turnaround in late February, and volumes moving to China from Taiwan having fallen in recent months, Group II availability in China remained snug. A couple of domestic plant turnarounds exacerbated the supply situation.

On the other hand, it appeared that Group III availability from domestic producers in China was adequate to cover much of the current demand, limiting the need for buyers to resort to imports. Domestic producers have also trimmed prices to maintain or conquer market share. Middle East product continued to move to China, but suppliers have also set their sights on destinations that offered more attractive margins in Europe and the U.S.

In India, spot prices have moved up for the heavier grades this week on strained regional supplies and budding demand. Most CFR India discussions were taking place at $5/ per metric ton higher than the previous week for Group I SN500 and bright stock cuts, and $5/t-10/t higher for Group II 500N. Group III spot prices also moved up by $5/t week-on-week given more limited supplies moving to India due to imminent turnarounds and holidays in the Middle East.

While some Indian buyers stepped into the market to secure volumes as consumption from the lubricant segment has picked up, other consumers were more cautious because supplier increased offer levels for April cargoes, but crude oil and feedstock prices have fallen. Base oil demand in India typically increases in early March, although this year, there were signs that buying interest was taking slightly longer to strengthen, perhaps because of lingering economic uncertainties.

A number of cargoes were under discussion for shipment to India, including an 8,000-10,000-ton cargo to be shipped from Daesan, South Korea, to West Coast India between Feb. 20-March 10. A 4,100-ton lot was on the table for shipment from Singapore to Mumbai the first week of March. About 15,000-18,000 tons were mentioned for possible shipment from Yanbu, Saudi Arabia, to Mumbai between March 18 and 25.

In terms of other regional shipments, there were discussions for a 2,000-4,000-ton cargo to be loaded in Yeosu, South Korea, to Bangkok, Thailand, or Singapore between Feb. 24-28. A 1,000-ton parcel was also mentioned for shipment from Yeosu to Taichung, Taiwan, in the first half of March. About 8,000-9,000 tons were likely to be shipped from Daesan to Hamriyah, United Arab Emirates, between Feb. 24-March 6. A second 1,000-ton cargo was mentioned for lifting in Daesan to Merak, Indonesia, in the second half of Feb. A 6,000-ton cargo was discussed for lifting in Ulsan, South Korea, to Tin Can Island Port, Nigeria, in the first half of March.  About 4,000-5,000 tons were discussed for lifting in Ulsan to Amsterdam-Rotterdam-Antwerp (ARA) between Feb. 20-March 5. About 2,200-4,500 tons were quoted for shipment from Yanbu to Singapore in March as well.

A 1,200-ton cargo was mentioned for shipment from Kaohsiung, Taiwan, to Singapore in late Feb, and a 1,300-ton from Mailiao, Taiwan, to Port Klang, Malaysia, between March 10-20.

The global base oil supply and demand balance may become more strained in the coming months as a string of permanent plant closures and maintenance programs will reduce availability.

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

The Pertamina Group I plant in Cilacap, Indonesia, was expected to undergo maintenance work from mid January until late February, according to reports. This has constrained the volumes available for export from this facility.

In China, 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 t/y. Fushun was expected to have a six to eight-week turnaround in late Q2 or early Q3 2025, according to sources.

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 was expected to be shut down in Feb. 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. 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.

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, a number of turnarounds may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have started a forty-five day turnaround at its Group II/Group III plant in Yeosu in late Feb. and had built inventories to cover term commitments during the outage, but spot supplies remained limited.

In China, an unplanned outage at the CNOOC Group II unit in Huizhou may be impacting 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.

In India, it was heard that Bharat Petroleum Corp. Ltd. would be completing maintenance work at its Group II facilities in Mumbai this month. The maintenance program started in late Feb.

In the Middle East, Luberef will be shutting down its Group I and Group II units in Yanbu, Saudi Arabia, for maintenance at the end of the first quarter or beginning of the second quarter and was expected to limit spot sales to build inventories ahead of the shutdown.

In the U.S., Chevron was also preparing to shut down its Group II plant in Pascagoula, Mississippi, in late March or April for a three to four-week turnaround and was expected to build inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. There was no direct confirmation about the turnaround from the producer.

In the Group III segment, 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 the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in March.

Prices

Crude oil futures fell by 1% on Friday as the U.S. president’s threat of tariffs on additional countries loomed, igniting concerns about a global economic slowdown and an increase in inflation rates. Prospects of a peace deal in Ukraine also weighed on commodity prices, although a resolution seemed to have been pushed further away following a heated meeting between Trump and Ukrainian president Volodymyr Zelenskyy last week.

On March 3, Brent May 2025 futures were trading at $73.23 per barrel on the London-based ICE Futures Europe exchange, from $74.48/bbl for March futures on Feb. 24.

Dubai front month crude oil (Platts) financial futures for March 2025 settled at $73.81/bbl on the CME on Feb. 28, compared to $74.75/bbl on Feb. 21.

Spot base oil prices were steady to firm this week, with a tighter supply and demand scenario exerting upward pressure on some grades. 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 stable to firm from a week ago. Group I solvent neutral 150 was unchanged at $780-/t820/t, and the SN500 was also steady at $1,040/t-1,080/t. Bright stock prices edged up by $10/t at $1,360/t-1,400/t, all ex-tank Singapore.

Prices for Group II 150 neutral were hovering at $840/t-880/t, and the 500N was steady at $1,070/t-1,110/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $650-690/t, but the SN500 moved up by $10/t to $900/t-940/t. Bright stock prices also edged up by $10/t to $1,210/t-1,250/t, FOB Asia on limited supplies.

Group II 150N held at $710/t-750/t FOB Asia, while 500N inched up by $10/t-20/t to $960/t-1,000/t FOB Asia.

In the Group III segment, the 4 cSt grade edged up by $10/t to $1,030-1,070/t, and the 6 cSt was also higher by $10/t at $1,060-1,100/t. The 8 cSt cut was notionally assessed up by $10/t at $960-1,000/t, although trading of this grade was muted.

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.