Base oil activity in China has slowed down because demand from the lubricants sector has not strengthened as much as suppliers had hoped for this month. Climbing base oil prices given tighter conditions in Asia did not help matters either. While buyers were aware of dwindling availabilities due to maintenance programs and permanent plant closures in recent years, which affected API Group I in particular, they were more resistant to the higher prices seen over the last few weeks because they were unsure they could recoup the steeper costs through lubricant sales. Competition among manufacturers was placing pressure on prices. Uncertainties regarding the country’s economic standing in the midst of a trade war with the United States exacerbated the situation.

Group I grades remained generally tight because of a shutdown at a Chinese unit and a structural deficit in the domestic market for heavy-viscosity grades. Bright stock was still in high demand, but buyers have retreated from actively pursuing offers because values were deemed too high. Some buyers preferred to consume existing stocks and wait for more product to come into the market when turnarounds are completed.

The Pertamina Group I plant in Indonesia has resumed production and additional cargoes were expected to enter the supply system. The producer already offered some small cargoes for spot business this month, but was also expected to allot a large portion of its base oil output to its own downstream lubricant production and domestic sales, so spot availability might be curtailed for a while.

In Thailand, a producer has offered some cargoes at higher prices due to the overall tight supply situation, but Chinese buyers seemed to shy away from the steeper offers.There may be some opportunities to secure Group I grades from Singapore at competitive prices instead.

Given recent unexpected reduced Group II output in South Korea at the Hyundai Oilbank/Shell plant and an ongoing turnaround at the GS-Caltex plant, supplies from that country have diminished, sending prices to higher levels, but lower feedstock values offset some of this pressure. With the Hyundai Oilbank/Shell plant ramping up production after suffering feedstock supplies issues earlier in the month, more product should become available soon.

The sole Taiwanese Group II producer, Formosa Petrochemical, has not been shipping as much product to China as in the past, and is sending material to other destinations in Asia and the Middle East. An 8,500-metric ton base oils cargo was expected to be shipped from Mailiao to Singapore and Merak, Indonesia, in the first half of April. A 2,000-4,000-ton cargo was mentioned for shipment from Taiwan to West Coast India in the second half of April.

Prices for the Group III grades have stabilized, although two Chinese producers continued to offer competitive prices so as to keep imports away and gain or maintain market share. There were fewer import cargoes moving to China in any case as suppliers were lured by more attractive pricing in Europe and the U.S.

With availability of the 8 cSt cut deemed ample against muted buying interest, prices have succumbed to downward pressure.

While China had until recent years depended largely on imports of most grades, particularly Group III, relatively new projects and expansions haver allowed the country to become more self-sufficient, and it appears that some producers were actually dealing with oversupply conditions which drove them to look for export opportunities. There were discussions about a 2,000-metric ton lot for shipment from China to Hamriyah, United Arab Emirates, in April. About 3,000-4,000 tons were mentioned for prompt shipment from Nantong to Mumbai, India as well.

In India, buyers are increasingly relying on domestic supplies since production capacity expanded, local producers offer competitive prices and deliveries are faster than those for deep-sea cargoes. However, there was still keen interest in imports, particularly as a couple of Indian refiners were conducting maintenance and supplies have tightened. Prices for Middle East material was still appealing, but movements have dwindled due to Ramadan.

Despite the need to source base oils from elsewhere, particularly Group I grades, Indian buyers appeared reluctant to pay the steeper spot indications that most cargoes were commanding and preferred to stick to term volumes and domestic supplies.

In terms of Group II grades, consumers preferred to delay purchases for as long as possible, in hopes that prices would fall as feedstock values have weakened and more base oils were expected to become available. A South Korean plant that had been running at reduced rates has increased output, and a couple of Indian refineries that were on turnaround should be restarted by the end of the month. All of this signaled availability should grow in the coming weeks.

Group III prices were stable to firm in India, because spot supplies were limited given that suppliers preferred to move product to more lucrative markets in Europe and the Americas.

In shipping circles, it was heard that a number of  base oil shipments were being worked on, including a 7,000-ton lot to load in Onsan, South Korea, to Haiphong, Vietnam, this month. A 2,000-ton lot was on the table for prompt shipment from South Korea to Hamriyah in mid April. About 2,000-3,000 tons were expected to be shipped from Sitra, Bahrain, to Port Klang, Malaysia, in mid April as well.

Production

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

Within the Group I segment, Pertamina’s Group I plant in Cilacap, Indonesia, underwent maintenance work from mid-January until late February, according to reports. This constrained available volumes for export from this facility, but the plant was heard to have been restarted and more cargoes were expected to be offered into the spot market.

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

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 were expectations that China National Petroleum Corporation/PetroChina’s Fushun plant, also in Liaoning, would be producing additional Group I base oils that could 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 Japan, tight Group I conditions persisted after the extended shutdown of a Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, but the plant was heard to have been restarted. 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 on Group I supplies was the 10-day turnaround at the IRPC Group I plant in Thailand in May. While the producer was expected 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.

In the Group II segment, a number of planned turnarounds and an unplanned run cut may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have started a 45-day turnaround at its Group II/Group III plant in Yeosu in late February and had built inventories to cover term commitments during the outage, but spot supplies remained limited.

Also in South Korea, Hyundai Oilbank/Shell significantly reduced operating rates at its base oil plant since early this month due to a refinery outage, which has limited the plant’s feedstock supply. Rates were heard to have been increased about a week ago, with the plant now running at close to top rates.

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 this month.

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-early 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 had been on a downward trend for most of the previous week because of economic uncertainties on a global scale, which were expected to affect oil demand, but futures traded higher on Monday because of positive reports about the Chinese economy. According to China’s National Bureau of Statistics, China’s industrial production showed 5.9% growth January-February 2025, while analysts expected 5.3% growth over that period. Additionally, China announced initiatives on Sunday to revive consumption, including plans to stabilize the stock and real estate markets, increase wages and strengthen birth rates in China.

U.S. military operations against the Houthis in Yemen also supported the crude oil prices on Monday morning. The U.S. announced that airstrikes would continue until the rebels cease their attacks on U.S. vessels.

On March 17, Brent May 2025 futures were trading at $71.21 per barrel on the London-based ICE Futures Europe exchange, from $70.02/bbl on March 10.

Dubai front month crude oil (Platts) financial futures for April 2025 settled at $71.06 per barrel on the CME on March 14, compared with $70.68/bbl on March 7.

Spot base oil prices were stable to soft this week, with many buyers adopting a wait-and-see attitude and subdued trading placing downward 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 steady to slightly lower from a week ago. The Group I solvent neutral 150 grade was assessed at $790-830/t, and the SN500 was unchanged at $1,040/t-1,080/t. Bright stock prices were holding at  $1,360-1,400/t, all ex-tank Singapore.

Prices for Group II 150 neutral slipped by $10/t to $840/t-880/t, but 500N was steady at $1,070-1,110/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 hovered at $660/t-700/t and SN500 at $900/t-940/t. Bright stock prices were steady at $1,220/t-1,260/t, FOB Asia on limited supplies.

The Group II 150N was steady at $720/t-760/t FOB Asia, while 500N hovered at $960/t-1,000/t FOB Asia.

In the Group III segment, 4 cSt grade held at $1,040/t-1,080/t and 6 cSt at $1,060/t-1,100/t. 8 cSt slipped by $10/t to $950/t-990/t on subdued buying interest.

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.