Asia Base Oil Price Report


Spot base oil prices in Asia are stable to firm, driven by higher offers from a number of producers on tightening supply-demand conditions and firming crude oil values.

Suppliers have been eager to revert the downward price trend observed since mid-2014, when base oil prices started to drop and fell by a total of around 40 percent over several months. Sources admitted that it will be an uphill battle to regain the lost territory.

However, market players also recognized that if there is a time when base oil suppliers are more likely to successfully implement price hikes, it is the spring, as buying interest flourishes in support of heightened production in the downstream finished lubricants segments.

But buyers underscored that increases are acceptable if they are gradual, amounting to between U.S. $10-20 per metric ton, while hikes of $30-40/ton are very difficult to digest.

Several suppliers have adjusted spot offers and list prices up on snug supplies and healthy buying interest in the last few weeks.

In Taiwan, Formosa Petrochemical was heard to have lifted its API Group II domestic list prices for April shipments. The producer increased its 70 neutral and 500N oils by an approximate equivalent of U.S. dollars $30-32 per metric ton, and its 150N oil by around $10-15/t as of April 1.

In Southeast Asia, a major refiner initiated an increase for its ex-Singapore list prices as of April 11, according to sources. The refiner raised its Group I solvent neutral 500 and bright stock by $40/ton, while its Group II 500N will be raised by $25/ton, sources said. The producer’s list prices for its Group I SN150 and Group II 150N will not experience any adjustments at this time. There was no producer confirmation forthcoming about the increases.

Several Asian producers were heard to have been running plants at reduced operating rates since mid-2014 in order to regain a more balanced suppy/demand scenario, given global oversupply conditions and falling prices.

In China, reduced import volumes from Russia and a couple of plant turnarounds have resulted in lower availability of Group I in certain areas of the country and higher domestic prices for April cargoes.

According to sources, a major Russian refiner has cut its Group I heavy-viscosity oil exports to China by close to 20 percent due to lower availability of these grades at the producer’s plant. Sources also commented that exports from Russia have fluctuated significantly over the past few months, but aside from possible production issues, they could not explain the reason behind the cutbacks.

As far as domestic base oil production is concerned, Chinese producer Karamay Petrochemical is expected to shut its 700,000 metric tons per year Group I unit in Xinjiang for a two-month turnaround in late April, sources said. Karamay is a PetroChina subsidiary.

A second PetroChina subsidiary, Fushun Petrochemical, was expected to restart its 260,000 metric tons per year Group I unit in Liaoning in late March, following an extended shutdown which began in January. Fushun Petrochemical mainly produces Group I SN150 and SN400 base oils. The restart of the plant was postponed from an original date in late February. An update on the status of the operations could not be obtained this week.

In the Group II segment, Nanjing Petrochemical, a Sinopec subsidiary, had been expected to start production at its new 200,000 ton/year Group II base oil plant in Nanjing in April, but has apparently delayed the start-up to May.

Base oil consumption is expected to be overall sluggish in China this year due to economic uncertainties and lower-than-anticipated demand from the automotive and industrial lubricants segments.

A majority of spot base oil price indications underwent upward revisions in Asia this week on higher buying/selling ideas and transaction levels.

On an ex-tank Singapore basis, Group I solvent neutral 150 prices were assessed unchanged at $660-$680/t, but SN500 and bright stock moved up by $20/ton to $700-$740/t and $1,040-$1,080/t respectively.

On an FOB Asia basis, Group I SN150 was assessed up by $10/ton at $550-$580/t FOB. SN500 was adjusted up by $20/ton to $600-$620/t FOB. Bright stock prices were also up by $10/ton at $1,030-$1,050/t FOB.

Group II prices were up by $10/ton for 150 neutral at $580-$620/t FOB Asia, and were assessed higher by $20/ton at $660-$700/t FOB Asia for 500N.

Group III prices were steady, with the 4 centiStoke and 6 cSt oils mentioned at $960-$980/t FOB Asia. The 8 cSt grade was assessed at $760-$780/t FOB Asia.

Only a handful of fresh shipping inquiries emerged during the week, with a 1,550-metric ton cargo composed of two base oil grades mentioned for Onsan, South Korea, to Tsurumi, Japan, for April 17-25 lifting. A 2,000-2,500-ton lot was being discussed for Onsan to Zhenjiang, China, for April 12-14 shipment. A 6,600-ton lot of five grades was expected to be shipped from Yeosu, South Korea, to Mumbai, India, on April 24-28, with a second cargo of 3,000 tons including three grades also quoted for Yeosu to Ennore, India, for the same dates.

Upstream, May ICE Brent Singapore futures were trading at U.S. $59.25 per barrel in afternoon trading on April 13, compared to $56.08 per barrel on April 6.

Gabriela Wheeler can be reached directly U.S. posted paraffinic base oil prices, as reported each week in Lube Report from Jan. 2004 to the present, are now available in Excel format.

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