Asia Base Oil Price Report


Mixed price trends were observed in the base oil market in Asia. High-viscosity grades remained under downward pressure, while light-vis cuts were being offered at higher numbers than in December.

This situation was particularly evident in the API Group II segment, as requirements for 150 neutral remained healthy on stronger winter demand and tightened availability, while the heavier grades were more abundant.

Sources said that suppliers of 500/600N were eager to reduce high-vis stocks and were willing to adjust prices down to find a home for their product, while prices for 150N were stable to firm, with some offers climbing $10-$20 per metric ton over December transactions.

In China, 150N offers were heard at around $1,000/ton or slightly below FOB Asia, while 500/600N was available at close to $1,010/ton FOB, but attracted few takers.

Demand in China and Taiwan was expected to slow down ahead of the Lunar New Year observed from January 31 to February 6, because many downstream facilities idle operations as workers travel to their home towns for the holidays.

On the other hand, a few sellers said that buyers had acquired some cargoes to pad up inventories for production after the holidays, when activity in the base oils market usually picks up. Additionally, many consumers hope to beat possible price increases, which often occur because of the heightened activity.

Meanwhile, firm crude oil and feedstock prices were forcing local base oil facilities to cut production rates or halt operations because of thin margins and weak market economics, sources in China said. The only two base oil plants in Shandong province, Sinopec Jinan (which produces 150,000 tons/year of Group II cuts) and Shandong Qisheng (with a capacity of 70,000 tons/year of Group I grades), for instance, were heard to have been idled for the month of January.

However, Group II production in China should see a boost later this year when Sinopecs Maoming and Beijing Yanshan plantscome on stream.

The upgraded Maoming unit in Guangdong province, which produces approximately 300,000 metric tons per year of Group I cuts, will be adding 200,000 tons/year of Group II production. The Maoming unit is expected to come on line in late March or April, market sources said.

The Yanshan unit, with a capacity of 300,000 ton/year Group II base oil, is expected to start up in Beijing in mid 2014, according to sources.

As a result of these capacity additions, Group II imports may drop in the second half of the year.

While demand for Group I is still quite strong in China, sources said that because Group II cuts are available at similar levels as Group I cuts, but offer better quality, many buyers have switched to Group II base oils.

The one Group I segment that is difficult to substitute is bright stock, and prices have therefore remained comparatively high within China, sources said, despite decreases in other areas such as Southeast Asia. Last week, a major Singapore refiner lowered its bright stock term prices to China by $30/t, effective Jan. 8, market sources said.

However, due to severe weather conditions, the transportation of bright stock by railcar within China often suffers delays and therefore, prices typically go up during the winter season.

Meanwhile in India, a few cargoes of United States origin were still expected to arrive this month; the parcels were purchased in the last two months of 2013.

Offers of U.S. product for January shipment were heard to be very competitive, with Group II 600N mentioned at $1,080/ton CFR India. The same cut of Korean origin was heard on offer at $1,100/ton CFR India.

A northeast Asia producer who was trying to implement an increase of $10/ton on January shipments of Group II light-vis cuts to India has met with steep resistance, sources said, but has been able to conclude several shipments for the month.

In the Group I segment, current price ideas for solvent neutral 150 were reported at $930/ton CFR India and at $950/ton CFR for SN500.

In general terms, prices in Asia were assessed as stable to soft from the previous week. In the Group I segment, solvent neutral 150 was assessed at $920-$970/t, SN500 at $1,020-$1,050/t, and bright stock at $1,110-$1,160/t, all FOB Asia.

Group II material was assessed at $980-$1,040/t FOB Asia for 150N, and at $1,050-$1,110/t FOB Asia for 500N, down by $30-$40/ton from a week ago.

Group III prices were mentioned at $1,010-$1,060/t FOB Asia for 4 centiStoke and 6 cSt, and $1,000-$1,040/t FOB Asia for the 8 cSt cut, reflecting decreases of $10/ton over the previous week.

On the shipping front, a number of fresh inquiries surfaced this week, with a 3,000-metric ton cargo expected to be shipped from Yokkaichi to Tianjin during Feb. 8-10. In South Korea, shipping agents were working on a 2,000-ton parcel of three base oil grades from Yosu to Taichung, for lifting on Jan. 10-20, and delivery before Jan. 29. A second lot of 3,000 tons was being discussed for Yosu or Ulsan to Tianjin or Nantong for 2H Jan. shipment. A 2,500-ton parcel of two grades was likely to cover Yosu to Mumbai during Jan. 25-30. Finally, a 2,500-ton cargo was on the table for Livorno to Mumbai during Feb. 1-10.

Upstream, February ICE Brent Singapore futures were trading at $107.37 per barrel during the Asian trading day on January 9, compared with numbers at $112.42 per barrel a week ago.

Gabriela Wheeler, based in Japan, can be reached directly at

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