Asia Base Oil Price Report


There appear to be conflicting currents affecting base oil prices in Asia, with the low-viscosity grades exposed to upward pressure and the high-vis cuts seeing some softening.

Market sources said that while API Group I and II light grades continued to be short, heavier cuts were plentiful.

A major Singapore refiner has communicated that it would be lifting its ex-tank Singapore term prices for API Group I solvent neutral 150 by $20-$30 per ton this week. Contrary to typical price revisions in the past, the supplier appears to be adjusting prices on a piecemeal fashion. For example, the refiner had decreased term prices for the Group II 500 neutral grade exported to China by $20/ton only two weeks ago.

Producers spoke of difficulties in attempting to improve margins despite the fact that spring is typically when increases are pushed through.

High feedstock costs have eroded margins, but the ample availability of most base oil grades constitutes a roadblock towards achieving much-needed increases, suppliers said.

A Southeast Asian producer said that its supply was well-balanced against demand, and admitted that implementing price hikes has been a challenge.

A second producer concurred, adding that a slow start to the busiest season of the year and the perception of slight oversupply in Asia has caused strong resistance to the proposed increases.

Despite tightness of the low-vis grades, buyers have been reluctant to accept higher offers because there are no shortages of product. Furthermore, most consumers are able to secure enough material under contract, even though spot volumes are limited, and there are almost no turnarounds planned over the next several months, sources explained.

In Taiwan, Group II base oil producer Formosa is not able to offer any spot cargoes in April because it has committed to covering contracts. The seller said that it had received increased orders from term customers for the month and that it was running its plant at full capacity.

Also in Taiwan, Group I producer CPC-Shell is abstaining from offering April spot cargoes for similar reasons, but also because its low-vis line remains shut down, market participants said.

A couple of Taiwanese buyers confirmed that the volumes they had purchased this month were higher than in February and that the local suppliers had therefore granted more advantageous pricing.

Sources also commented that finished lubricants demand in Taiwan was stable without a significant uptick, making it difficult for manufacturers to push price increases.

In Korea, suppliers also said that they did not have much to sell on the spot market, and agreed that some term customers had increased orders for March and April.

Suppliers have been trying to attain price increases in the realm of U.S. $20-$30/t for April transactions, and have been able to implement only a portion of the hikes in some cases, and no increase at all in others.

However, suppliers have not given up on price hikes, particularly in China, where low-vis cuts continue to be in short supply. The market imbalance stems from healthy demand against reduced supply as several domestic producers complete turnarounds.

Aside from limited regional spot availability, trader sources said that there had been less Russian material imported into China in March because of current and upcoming plant outages. Prices for Russian cargoes of the low-viscosity Group I cuts have inched up by about $10/ton this month from February levels, sources added.

Meanwhile in India, activity has been fairly sluggish as consumers hesitate to secure cargoes ahead of the end of the fiscal year on March 31. Sellers were also heard to be holding several imported Group I cargoes, and buyers were not under pressure to jump at the first offer.

Group I prices in India were heard near $930-$970/ton CFR India for SN150, $950-980/ton CFR for SN500 and $1,170-$1,200 CFR for bright stock.

Conditions may remain lackluster in India through May due to general elections, held in nine phases from April 7 to May 16–the longest election in the country’s history–and both buyers and sellers prefer to wait until the results are confirmed.

In terms of base oil prices, indications in Asia were assessed as stable-to-firm from the previous week.

Group I solvent neutral 150 was assessed $10/ton higher at $950-$980/t FOB Asia. SN500 was holding at $1,030-$1,070/t, and bright stock at $1,130-$1,180/t, all FOB Asia.

Group II 150N inched up $10/ton to $1,010-$1,050/t FOB Asia, while 500N was steady at $1,050-$1,100/t FOB Asia.

In the Group III segment, 4 centiStoke and 6 cSt oils were stable at $1,030-$1,080/t FOB Asia, and the 8 cSt grade was also unchanged at $1,020-$1,050/t FOB Asia.

On an ex-tank Singapore basis, prices were assessed at $1,040-$1,090/t for Group I SN150, reflecting a $20 to $30/ton increase as mentioned above. The SN500 grade was unchanged at $1,050-$1,120/t and bright stock was also steady at $1,170-$1,230/t.

There was quite a bit of interest to move base oils ex-South Korea this week, with a 2,800-metric ton cargo of four grades expected to be shipped from Yeosu to Merak, Indonesia, during April 20-30. A second 1,100-ton lot of two grades was expected to be loaded in Yeosu for Gresik, also in Indonesia, in April. A 1,500-ton parcel was being discussed from Ulsan to Hong Kong and Zhuhai, China, for April 3-7 loading. A 1,000-ton cargo was on the table for Ulsan or Yeosu to Nansha, China, for March 25-29 lifting. A 3,000-4,000-ton lot was expected to cover Ulsan or Yeosu to Nantong, China, for March 25-29 loading.

Finally, a 2,000-ton parcel was being worked on from Karachi, Pakistan, to Hamriyah, United Arab Emirates, for March 22-23 shipment.

Upstream, May ICE Brent Singapore futures were trading at $106.68 per barrel in afternoon trading March 24, compared with April futures at $107.57/bbl on March 17.

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