Base oil buyers and sellers in Asia were trying to finalize January and February business before activity comes to a standstill during the Lunar New Year holidays.
While the general sentiment in the market was that base stock prices remained under downward pressure, a number of suppliers had been hoping to attain slight increases in the realm of U.S. $10-$20 per metric ton for February or end January shipments of low-vis grades as these have been in tighter supply than high-vis cuts. The tightness was mainly the result of healthy demand during the winter months.
Availability of low-vis cuts may be further reduced as a Taiwanese supplier was heard to be planning to reduce its API Group II low-vis spot volumes to China in February to focus on its contractual obligations. The Group I low-vis train of a second Taiwanese producer remains off-line due to poor market economics, according to sources.
However, weakening crude oil and feedstock prices, together with a slowdown in demand in areas such as Southeast Asia were undermining suppliers intentions of moving prices up as competition among suppliers remained high.
A majority of January transactions were finalized at numbers very close to December levels, or about $10-$20/ton lower, sources said. The final price depended on the buyers inventory levels, as some consumers were holding low stocks of one particular grade and were willing to pay the asking price if they needed the product, sellers said.
In China, buying appetite has started to weaken on account of the holidays celebrated Jan. 31 to Feb. 6. While a few buyers were still securing small cargoes in order to have enough inventories to cover production needs immediately after the hiatus, most consumers were staying away from the market as many blending facilities shut down operations for at least a week.
At the same time, some traders and sellers still had several cargoes on their hands that they were trying to place before the holidays, leading them to lower offers by $10-$20/t in order to seal the deals.
Furthermore, in countries such as India, there was also availability of very attractively-priced domestic material and imports from the U.S. and the Middle East, which made it difficult for regional suppliers to implement price hikes.
Several cargoes of U.S. origin were scheduled to arrive in India over the next few weeks. Prices of these cargoes were considered very competitive and likely to be at break-even point for the producers; however, the domestic market in the U.S. had been slightly oversupplied in the last quarter of 2013 and suppliers had resorted to selling extra material to several export destinations in India and Europe. Freight rates for the U.S. Gulf-to-India route were heard near $100/t.
Within the Group II segment, 150 neutral from the U.S. was mentioned at $1,010/t CFR India. The 600N cut of U.S. origin was heard at $1,080/t CFR India, while product of Korean origin was heard on offer at $1,100/t CFR India. A 500N cargo, also of Korean origin, was mentioned at $1,050/t CFR India. These prices were not confirmed by the suppliers.
Price indications for Group I solvent neutral 150 were hovering around $930/t CFR India and at $950/t CFR for SN500, for domestic product as well as some imports, according to buyer sources.
Participants in India have adopted a cautious attitude regarding commercial decisions as the national budget is to be approved by the government in February.
Meanwhile, in other parts of Asia, it was not yet clear whether base oil prices would recover after the Lunar New Year holidays. Demand typically tends to improve in February ahead of the busy spring production season.
In the meantime, prices continued to be generally exposed to downward pressure, but some of the published indications have been adjusted up to more accurately reflect current transactions, particularly in the Group III segment.
Within the Group I segment, SN150 was assessed largely unchanged 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 also heard at steady levels at $980-$1,040/t FOB Asia for 150N, and at $1,050-$1,110/t FOB Asia for 500N.
Group III prices were mentioned at $1,020-$1,060/t FOB Asia for 4 centiStoke and 6 cSt, reflecting a $10/t upward revision at the low end of the range, while the 8 cSt cut was stable at $1,000-$1,040/t FOB Asia.
On the shipping front, cargo movements dwindled as the week progressed, likely because of the upcoming start of the holidays when terminal and port personnel is reduced. A 1,000-ton lot was likely to be shipped from Onsan, South Korea, to Tianjin, China, between Jan. 21 and Jan. 25. A 3,000-ton parcel composed of four grades was on the table for Yosu, South Korea, to Taichung, China, for prompt shipment and arrival before Jan. 29. A second 3,000-ton parcel was expected to cover Yosu to Bayuquan, China, for prompt lifting and arrival by Jan. 23. A 3,200-ton cargo was expected to be shipped from Hong Kong to Yokohama, Japan, during Feb. 8 to 12. A 3,000-ton base oil cargo was still being worked on from Yokkaichi, Japan, to Tianjin for Feb. 8 to 10 shipment. A 2,300-ton lot of two grades was likely to cover Mailiao, Taiwan, to Mumbai at the end of Jan. Finally, a 2,000-ton parcel of three grades was being worked on for Livorno, Italy, to Mumbai during Feb. 1 to 10.
Upstream, March ICE Brent Singapore futures were trading at $106.17 per barrel during the Asian trading day on January 20, compared with numbers at $106.80 per barrel for February futures a week ago.
Gabriela Wheeler, based in Japan, can be reached directly at Gabriela@Lubesngreases.com