Asia Base Oil Price Report


Base oil prices across most of Asia continued their upward trend, except for a few pockets featuring ample availability, stiff competition and lower-priced imports.

Spot offers from a few regional suppliers saw upward revisions this week, with numbers reflecting increases anywhere between U.S. $10 and $30 per metric ton, depending on supplier and viscosity grade. These follow recent list price increases by a number of producers in Asia.

Reports circulated that a large global refiner with production facilities in Singapore will be raising list prices April 29. This is the second increase by that this month. The first – which affected heavy grades only – took into effect in mid-April, according to sources.

This time, it was heard that the producers API Group I solvent neutral 500 will be raised $30/t and its bright stock $20/t, while its Group II 150 neutral will be lifted by $15/t and its 500N by $30/t, market sources said. The only cut that appears to have been left intact is Group I SN150.

In the previous round of increases, the refiner increased its Group I SN500 and bright stock by $40/t, while its Group II 500N moved up $25/t, sources said. There was no producer confirmation forthcoming about the increases.

In Taiwan, Formosa Petrochemical was heard to have increased its API Group II domestic list prices between $10/t-$32/t, depending on the cut, for April shipments. The supplier is starting discussions for May shipments, but no definitive price ideas could be obtained during the week.

Formosa was expected to restart its 600,000 ton per year Group II base oil plant in late April, following a turnaround that started in early March, according to sources. The plant was originally expected to resume production at the end of March or early April.

Sources noted that the SN500, bright stock, and 500/600N cuts were particularly snug in Asia, as demand for imports of these grades from most countries has been healthy, with the exception perhaps of China, where local availability of Group I oils was considered sufficient to meet a large portion of current requirements.

Aside from a tightening supply-demand ratio, firming crude oil futures were also lending support for stable-to-firm base oil prices in Asia.

Crude oil values rebounded 17 percent this month as a record decline in the number of operating oil rigs – prompted by lower crude prices – triggered speculation that global production will soon slow down, market analysts said. Brent futures breached the $60 per barrel mark, after hovering in the high $50s/bbl the previous week.

However, crude prices were anticipated to remain volatile, and both base oil producers and buyers continued to keep a keen eye on raw material values. Economic uncertainties – which have been impacting demand from the lubricants segment – and plentiful base oil supplies in the key market of China were also expected to limit the upward price momentum seen so far in Asia.

Meanwhile, base oil prices remained variable in India as they were exposed to competition among suppliers, with cargoes from outside India exerting downward pressure on indications. Discussions were centering on May shipments, with offers for Northeast Asian material of Group II 150N cargoes offered at around $680/t-$710/t and 500N around $750/t-$770/t CFR India.

Based on general discussions and transactions, some of the price ranges were assessed up this week, while others remained unchanged. While buying and selling ideas were often separated by a gap of $20/t, some transactions were able to be concluded as players attained a compromise.

On an ex-tank Singapore basis, Group I solvent neutral 150 prices were assessed steady at $660-$680/t, while SN500 was revised up by $10/t to $710-$750/t and bright stock edged up by $10-$20/t to $1,060-$1,090/t.

On an FOB Asia basis, Group I SN150 was unchanged at $550/t-$580/t FOB. SN500 was revised up by $20/t to $620/t-$640/t FOB. Bright stock prices were steady at $1,030/t-$1,050/t FOB, following an upward revision the previous week.

Within the Group II category, prices for 150 neutral were unchanged at $580/t-$620/t FOB Asia, and were assessed higher by $10/t at $670/t-$710/t FOB Asia for 500N.

Group III prices were revised down to bring the assessed ranges closer to actual market prices and published ranges widely considered as benchmarks, but were not reflecting actual decreases in bids and offers. The 4 centiStoke and 6 cSt oils were gauged at $920/t-$950/t FOB Asia, and the 8 cSt grade was assessed at $730/t-$750/t FOB Asia.

On the shipping front, there was a flurry of inquiries to move product from South Korea to destinations throughout Asia. A 1,000-ton cargo was being discussed for Yeosu to Singapore for end of April shipment. A 1,200-ton lot was expected to be shipped from Yeosu to Merak, Indonesia, between May 1-10. A 6,600-ton parcel of five base oil grades was on the table for Yeosu to Mumbai, India, for April 24-28 lifting, while a 3,000-ton cargo of three grades was being quoted for Yeosu to Ennore, India, for the same dates.

A 1,000-ton lot was expected to be shipped from Yeosu to Ho Chi Minh, Vietnam, between May 5-20. A 1,300-ton cargo of two grades was under discussion for Yeosu to Tanjung Priok, Indonesia, for May 10-15 lifting. A 2,000-ton cargo was on the table for Yeosu to Manila, Phillippines, for May 2-6 shipment. A 2,500-ton lot was discussed for Yeosu or Ulsan to Tianjin, China, for prompt shipment. A 1,000-ton cargo was quoted for Ulsan to Dongguan, China, for April 20-30 lifting.

Upstream, June ICE Brent Singapore futures were trading at $63.57/bbl in afternoon trading on April 20, compared to $59.25/bbl on April 13.

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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