Asia Base Oil Price Report


The base oil market in Asia was in the process of resuming its regular trade flow as participants returned to their workplaces following the Lunar New Year holidays. Producers felt that it was still too early to ascertain whether this year would follow the usual pattern, but a few players said that they had seen some positive signs.

In years past, demand has tended to flourish after the Lunar New Year because downstream manufacturers start to pad inventories in preparation for the busy spring production season. Furthermore, many consumers finish the year with low inventories, and they have no option but to step back into the market to replenish stocks.

A Taiwanese API Group II producer said it had seen an increase in requirements for February cargoes secured under term contracts, and as a result, the supplier was unable to offer any spot cargoes and expected a similar situation to apply to March shipments. The suppliers product was mostly absorbed by Chinese and domestic term customers. Although the producer was running its base oil plant at one hundred percent capacity, fewer production days in February meant that its output had been slightly lower for the month.

The supplier also commented that while supply for the light-viscosity grades continued to be tight, there had been increased buying appetite for the heavier grades, and this was causing some tightening in that segment as well.

A second Taiwanese producer concurred that term demand had been strong for February cargoes as buyers were preparing for the high lubricant production season. The Group I supplier was not participating in the spot market either, as it was focusing on contract business, and it had yet to start negotiating its March shipments.

The producer expected its supply to become tighter in the next few weeks, despite the fact that its base stock plant was running at full capacity and there was no turnaround scheduled until November of this year. The companys low-vis line, however, has been off-line since late 2013 given weak market economics.

In the Group III segment, a Southeast Asian supplier is also sold out until March and expects demand to remain buoyant as buyers are seeking fresh supply for the next couple months.

However, there were still a lot of uncertainties lingering in the market. A slowing Chinese economy and financial turmoil in some developing countries could also negatively impact the base oil market in the short term, sources said.

In Thailand, for example, political and social unrest following an inconclusive general election on Feb. 2 could impact the countrys economic situation over the next several months.

In India, currency fluctuations and concerns about an upcoming vote on a national budget were hurting base oil business, according to market participants. While the market elsewhere in Asia was expected to be on an upward trend, India was a different story, a supplier said. Aside from the fact that India was receiving very competitively priced cargoes from the U.S., Indian buyers were limiting purchases to small cargoes on a need-to basis, and this was not good news for Asian suppliers.

Nevertheless, a northeast Asian producer said it had been able to finalize February transactions into India at fairly stable prices from January, and it had sold about 6,000 metric tons of base oil for the month. March negotiations will be starting next week, the supplier added.

Given that business was still fairly subdued, prices remained generally unchanged in Asia this week. Group I 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.

Prices for Group II material were steady at $980-$1,040/t FOB Asia for 150 neutral, and at $1,050-$1,110/t FOB Asia for 500N. Prices for Group III base oils were unchanged from last week, with 4 and 6 centiStoke oils hovering at $1,020-$1,060/t FOB Asia, and the 8 cSt grade assessed at $1,010-$1,050/t FOB Asia.

The shipping market has come back to life, with several fresh inquiries popping up this week. A 1,000- ton cargo was on the table for Mizushima, Japan, to Tianjin, China, for Feb. 21-27 shipment. A second lot of 5,000 tons base oil was expected to be shipped ex-Mizushima to Nantong, China, and Tianjin during the same time period. A 2,000-ton parcel was being quoted for Mizushima to Manila, Philippines, for shipment at the end of February or early March.

A 4,000-ton parcel made up of two base oil grades was being discussed for Yosu, South Korea, to Nantong for lifting on Feb. 15-18. A second 1,000-ton lot was on the market for shipment from Yosu or Ulsan, South Korea, to Tianjin, also for the same dates. A 3,000-ton cargo of two grades was expected to ship from Onsan, South Korea, to Taicang, China, for shipment on Feb. 16-18. Ship operators were also working on a 2,500-ton lot of two grades from Onsan to be delivered in Tianjin between March 1 and 5. Finally, a 2,000-ton lot was expected to move from Karachi, Pakistan to Mumbai, India, during Feb. 6-12.

Upstream, March ICE Brent Singapore futures were trading at $109 per barrel during the Asian trading day on Feb. 10, compared with $106.06/bbl on Feb. 3.

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

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