Prices of in China API Group II 150N base oil rose in August, with the country’s price index for that grade increasing 138 points from July, according to Lube-info.com. Firmer pricing across the domestic market was propelled by producers pushing up offers, higher crude and feedstock costs and tighter spot availability.
Continued disruption to Middle Eastern shipping has made crude supply into China has more expensive and uncertain, while Chinese refiners have been rebuilding runs and inventories after periods of reduced activity.
China’s wholesale 150N price at ¥9,197 per metric ton on Aug. 21, up ¥31/t from the previous day. The price had risen by ¥47/t on Aug. 20. By Aug. 24, OilChem had assessed the wholesale price at ¥9,284/t, an additional ¥87/t increase.
The Shanghai Lubricant Trade Association compiles the index based on prices charged by a number of Chinese base oil refiners. China has the largest base oil supply base in the world, and the majority of its nameplate production capacity is for Group II oils.
Buyers in the region have also moved to secure crude supplies, adding pressure to feedstock costs. Eastern Siberia-Pacific Ocean pipeline cargoes, an important source of crude for Chinese refiners, have attracted stronger buying interest, with October cargoes trading at a significantly higher premium to Brent crude than in July.
Downstream lubricant demand remains cautious, with buyers sensitive to higher base-oil costs and largely purchasing for immediate requirements rather than building substantial inventories.