Asia Base Oil Price Report


While business has started to wind down ahead of the Jan. 31 to Feb. 6 Lunar New Year celebrations, base oil suppliers were looking forward to the days following the holiday, when trading was anticipated to perk up.

Sentiment has been fairly somber among producers because base stock prices have been under downward pressure amid plentiful supplies and lackluster demand. However, some producers shared feelings of guarded optimism as requirements are expected to improve following the holidays. Others were less optimistic and said that they had yet to see any signs of an improvement in terms of orders.

Indeed, a number of buyers said they were postponing purchases until the new year and were trying to make do with existing inventory until the end of the month.

Buyers have been holding off on purchases as many downstream manufacturing plants either cut running rates or shut down operations during the holiday, when workers visit their hometowns, particularly in countries such as China and Taiwan.

A Taiwanese supplier said that it had already finalized all of its February shipments. The supplier will not be able to participate in the spot market next month, as it must allocate its output to cover its term commitments, despite running its plant at full tilt. The cargoes were agreed on an undisclosed formula based on published prices that are considered industry benchmarks, but the supplier said that it was hoping that numbers would be moving up in February.

The producer said that requirements for February had increased and that it planned to ship 50 percent of its monthly export availability – which is estimated to total approximately 50,000 tons – to term buyers in China, while the balance of its production was for the domestic market.

Some sources contended that supply will increase in coming months, predicting a revival for refineries and base oil plants shut down or running at reduced rates because of weak market economics and feedstock supply problems. Such is the case of Shandong Qisheng Industry & Trade, which is expected to restart its API Group I base oils unit in Zibo, China, in February. Sinopecs refinery in Jinan, China, is also anticipated to bring its Group I unit back on stream in March.

A base oil consumer with manufacturing facilities in China was finalizing February cargoes before the holiday and said that prices were largely flat from January. The buyer said that demand from the downstream lubricants segment had slowed ahead of the holiday, but that this situation was temporary and within expectations for the winter months. Blending activity typically picks up during the spring season, the source added, and signs of an improved market situation should emerge as February gets underway.

Prices for Group III base oils have seen substantial downward pressure in Asia recently, but numbers were heard to have stabilized the past week at U.S. $1,020-$1,060 per ton FOB Asia for 4 centiStoke and 6 cSt, while the 8 cSt cut was discussed at $1,000-$1,040/t FOB Asia.

Within the other base stock segments, prices were fairly unchanged, with Group I solvent neutral 150 heard at $920-$970/t, SN500 at $1,020-$1,050/t, and bright stock at $1,110-$1,160/t, all FOB Asia. A Group I seller said that bright stock availability had improved compared to the previous two months, when this cut had been in tight supply in Asia.

Prices for Group II material were also fairly steady at $980-$1,040/t FOB Asia for 150 neutral, and at $1,050-$1,110/t FOB Asia for 500N.

As far as shipping activity was concerned, there were quite a few inquiries to move product ex-South Korea this week. A 2,000-metric ton cargo of two base oil grades was being discussed for Yosu, South Korea, to Tianjin, China, for February shipment. A 1,500-ton lot was expected to ship from Onsan, South Korea, to Tianjin during Feb. 21-24. A second 1,500-ton parcel made up of two grades was on the table for Ulsan, South Korea, or Yosu to Merak, Indonesia, for Feb. 18-28 shipment.

Several cargoes were also on the table ex-Korea and Hong Kong to Japan. A 1,200-ton parcel was being worked on for Onsan to Tsurumi, Japan, for Feb. 16-20 lifting and Feb. 20-24 delivery. A 1,100-ton lot was quoted for Onsan to Yokohama, Japan, during Feb. 14-18. A 3,200-ton parcel was being worked on for Hong Kong to Yokohama for Feb. 8-12 shipment.

Conversely, a 5,000-ton cargo was likely to ship from Mizushima, Japan, to Ulsan at the end of January.

Upstream, March ICE Brent Singapore futures were trading at $107.64 per barrel during the Asian trading day on January 27, compared with numbers at $106.17 per barrel a week ago.

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

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