Crude oil prices were expected to be exposed to downward pressure this year given potential production expansions and new oil discoveries in the giant Tengiz field in the Kazakh section of the Caspian Sea and the Bacalhau field in Brazil, according to OilPrice.com. However, new projects will only come on stream if the price of crude oil is deemed favorable.

This week, state-owned Sinopec reported a 16.8% decline in 2024 net profit, citing lower crude oil prices and the accelerated development of the new energy vehicle industry, according to Reuters.

Also in China, certain economic priorities, such as revitalizing domestic demand, and increasing investments in energy and technology were receiving special government attention, with new policies aimed at improving conditions. But many uncertainties lingered, particularly after the implementation of sweeping United States tariffs on Chinese imports. Several top executives from international companies, including Mercedes-Benz, Saudi Aramco, FedEx and Siemens will be gathering in Beijing this week for the China Development Forum amid plummeting inbound investments and growing concerns about the repercussions of the U.S. tariffs.

Buying appetite for base oil spot cargoes has fizzled as consumers shied from the higher offers emerging in the market since spot supplies have tightened in the region. The shutdown of an API Group I facility in China only made matters worse. There was interest in imported Group I grades because of a structural deficit of the high-viscosity grades in the country, and offers of Indonesian and Thai origin had been considered. It was heard that part of an Indonesian Group I tender may have been secured by a Chinese importer in early March, but this could not be confirmed. Further buying interest for southeast Asian cargoes appeared to have weakened.

In general, buyers preferred to make do with existing stocks, rerefined barrels and local products, rather than risk purchasing on the international spot market as prices have climbed. Domestic prices, on the other hand, have been stable, or have fallen slightly for most Group II grades.

Bright stock demand had so far been fairly robust in China, but as the month of March wound down, so did consumption of this grade given that downstream applications in the industrial, heavy duty and agricultural segments have not been as strong as anticipated.

With Indonesian Group I producer Pertamina having resumed production following a turnaround, and additional cargoes expected to become available, some of the pressure to secure Group I cargoes has diminished. The producer has offered some small cargoes for spot business, but was also expected to allot a large portion of its base oil output to its own downstream lubricant production and domestic sales.

Thai bulk bright stock supplies for April were heard to have been awarded, and buyers were awaiting offers for May availabilities.

Group II domestic output was deemed adequate to meet most of the current demand in China, with prices said to be holding. Many buyers preferred to rely on contract volumes rather than venture out into the spot market, and domestic supplies were considered more competitive than imported product, with offers heard to have slipped week-on-week. The Group II may see some tighter conditions as both domestic and regional plant turnarounds were underway.

Within the Group III segment, competition between domestic producers and imported base oils continued, with local suppliers revising prices down in order to protect or gain market share. Supplies from the Middle East and South Korea were heard to be plentiful. This triggered further downward price adjustments on imports.

In India, buyers have started to look more inward and to secure more domestic base oils, rather than rely on imports, as offers of locally-produced base stocks were competitive. However, even though domestic production has improved, it was not yet deemed sufficient to meet all requirements. Many consumers delayed their purchases until after the end of the fiscal year on March 31 and awaited April offers.

A couple of Indian refineries were conducting maintenance and supplies have tightened for a few Group I/Group II grades, but output should resume in April. Prices for Middle East material was still appealing, but movements have been more muted due to the Ramadan and Eid holidays.

Group I grades were still short in India and buyers were therefore more amiable towards accepting current offers for overseas cargoes, particularly of bright stock. However, the upward price momentum seen in the previous weeks has deflated, with prices generally reported as stable.

While most Group II base oil prices had surged on limited availability, prices for the low-viscosity grade have started to come under pressure due to lower gasoil prices and soft demand, with CFR India values for the 70N grade slipping by $5 per metric ton week-on-week. On the other hand, strained supplies of Group II 500N have pushed prices higher, with offers heard to have edged up by $5/t CFR India.

Demand for Group III was more limited in India, and current availability was deemed adequate to meet requirements. Offers were not as plentiful as for other grades as overseas suppliers preferred to focus on more high-value markets in Europe and the U.S. There were reports of both Middle East and Malaysian material being offered to Indian buyers.

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 will reduce availability.

Within the Group I segment, the Pertamina Group I plant in Cilacap, Indonesia, underwent maintenance work from mid January until late February/early March, according to reports. This had constrained the volumes available 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 have started a partial Group I and Group II turnaround in late Feb. that may last until end of March/early 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 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. There were expectations that Fushun would be ready to start producing additional Group I in April.

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 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 ten-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 Group I lube base oil production unit from mid July until late August.

Within 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 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.

Also in South Korea, Hyundai Oilbank Shell Base Oil had significantly reduced operating rates at its base oil plant since early this month due to a refinery outage which had limited the plant’s feedstock supply. Rates were heard to have been increased, with the plant now running at around 80% capacity.

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

As mentioned above, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and Group II plant starting this month.

Sinopec was also expected to shut down its Jinan unit for one month in April.

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 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. The U.S. typically exports Group II base oils to India when there is a surplus in the domestic market, which is not going to be the case in the coming weeks.

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 surged early in the week on news of additional U.S. sanctions on Iran, which could restrict oil exports, and OPEC+ announcing that it would adjust output levels according to market conditions. However, weak demand forecasts dampened trading and fueled a more bearish sentiment later in the trading session.

On March 24, Brent May 2025 futures were trading at $72.30 per barrel on the London-based ICE Futures Europe exchange, from $71.21/bbl on March 17.

Dubai front month crude oil (Platts) financial futures for April 2025 settled at $73.14/bbl on the CME on March 21, compared to $71.06/bbl on March 14.

Spot base oil prices were somewhat mixed this week, with many buyers adopting a wait-and-see attitude and business remaining sluggish. 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, but the SN500 was assessed down by $10/t at $1,030/t-1,070/t. Bright stock prices were firm at $1,360/t-1,400/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were heard at $840-880/t, and the 500N was holding at $1,07/t–1,110/t, ex-tank Singapore.

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

The Group II 150N was steady at $720/t-760/t FOB Asia, while the 500N inched up by $10/t to $970/t FOB Asia.

In the Group III segment, the 4 cSt grade was holding at $1,040/t-1,080/t, and the 6 cSt at $1,060/t-1,100/t. The 8 cSt was hovering at $950/t-990/t, but buying interest was muted.

Gabriela Wheeler can be reached directly atgabriela@LubesnGreases.com
Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.