Asia Base Oil Price Report


Some base oil prices in Asia have risen in recent weeks due to tight supply and flourishing demand, but certain segments of the market are flat-lining on account of ample availability.

Both suppliers and buyers experienced trepidation in terms of concluding business as crude oil futures remain volatile and base oil prices difficult to predict.

Oil futures registered the highest levels of the year last week on persistent fighting in Yemen, which underscored concerns about the security of Middle East oil supplies.

If crude strengthens over the next few weeks, the upward pressure on base oil prices could grow, suppliers said, as margins are already squeezed. However, slowing demand from some downstream segments would likely cripple significant upward price movements, sources said.

Heavy-viscosity oils continue to enjoy plenty of attention from buyers, and availability has tightened, allowing suppliers to raise spot prices during the month of April.

Within the API Group I segment, bright stock in particular has been the star of the show, with limited spot availability supporting increases of around U.S. $30-40 per metric ton, depending on the supplier.

A major Southeast Asian refiner lifted its bright stock list price by a total of $70/t through a couple of rounds of price increases, according to sources.

Spot availability of a number of Group II cuts also continues to be described as snug, as it was heard that Taiwanese producer Formosa Petrochemical is unable to offer extra volumes beyond those already agreed under contract, following the producer’s recent turnaround.

Formosa shut down its 600,000 ton per year Group II plant in Mailiao in early March for a maintenance program and resumed production last week, according to sources. The supplier is striving to fulfill contractual obligations in China, a key export market, but will not be able to offer spot cargoes in May.

Sources said that Group I and II supply in China was adequate for the time being and did not expect the reduced availability from Taiwan to have a significant impact if it lasted only a month.

Group II cuts have also been in high demand in Asia because prices had softened to a point where they were on par or even below Group I values, allowing consumers to use the high performance cuts in applications which typically require Group I oils.

By contrast, most light-vis cuts, both in the Group I and II segments, are readily available, and suppliers have faced resistance to higher price ideas.

With trading said to be fairly subdued, base oil prices were assessed as largely stable in Asia this week, although heavy-vis products remain exposed to upward pressure. Lighter grades are sputtering along, with few price changes noted.

On an ex-tank Singapore basis, Group I solvent neutral 150 prices were assessed stable at $660/t-$680/t, while SN500 was hovering at $710/t-$750/t and bright stock at $1,060/t-$1,090/t.

On an FOB Asia basis, Group I SN150 was heard at $550/t-$580/t FOB, while SN500 was holding at $620/t-$640/t FOB. Bright stock prices were steady at $1,030/t-$1,050/t FOB.

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

Trading in the Group III segment was difficult to track, and prices were therefore assessed unchanged, with the 4 centiStoke and 6 cSt oils heard at $920/t-$950/t FOB Asia, and the 8 cSt grade at $730/t-$750/t FOB Asia.

On the shipping front, the brisk pace observed over the last couple of weeks has subsided, and only a handful of fresh inquiries emerged. Ship operators and brokers hope that activity picks up in May. A 1,000-ton cargo was quoted for Yeosu, South Korea, to Merak, Indonesia, for May 20-30 lifting. A second 1,000-ton lot made up of two grades was on the table for Yeosu to Ho Chi Minh, Vietnam, for May 5-20 shipment. A 1,300-ton parcel was being discussed for Yeosu to Gebze, Turkey, for May 1-15 lifting. A 4,000-ton cargo was being worked on for Hong Kong to Yokohama, Japan, for May 1-3 shipment. Lastly, a 2,000-ton lot was expected to be shipped from Negishi, Japan, to China in mid May.

Upstream, June ICE Brent Singapore futures were trading at $65.40 per barrel in afternoon trading on April 27, compared to $63.57/bbl on April 20.

Gabriela Wheeler can be reached directly

Related Topics

Base Oil Pricing Report    Base Stocks    Other