Asia Base Oil Price Report


Contrasting currents are roiling Asias base oils market, with prices for most heavy-viscosity grades rising, and values for some light-vis cuts remaining stagnant or edging down.

This scenario has mostly been generated by the supply/demand situation, which resulted in a tight balance for the heavy-vis material and long positions for the lighter counterparts.

Revived demand for the heavy cuts, together with recent regional shutdowns at base oil facilities, reportedly brought about the snug conditions for the heavy cuts.

Taiwanese producer Formosa Petrochemical recently restarted its API Group II plant in Mailiao at the end of April, following a close to two-month turnaround which started in early March. The plant has a capacity of 600,000 metric tons per year of Group II grades.

There were also reports that SK Lubricants had quietly undertaken a turnaround at its Group II production train in Ulsan, South Korea, but details could not be corroborated. The producer was heard to have shut down its 300,000 t/y Group II unit for about a month in mid-March.

While several suppliers had raised list prices in March and April for a number of Group I and II cuts, in May, Formosa was heard to be actually lowering the prices of some of its light-vis cuts, while bumping up its heavy-vis cut.

Formosa was understood to be decreasing the price of Group II 70 neutral by an equivalent of about U.S. dollars $35 per metric ton, and 150N by approximately $15/t, in an effort to foster purchases of these grades.

On the other hand, the producer is lifting prices of 500N slightly above $10/t, with all these price adjustments going into effect at the beginning of May.

Previously, Formosa had increased list prices across the board between $10-32/t, depending on the product, for April shipments, and the hikes had been supported by reduced availability following the producer’s turnaround.

The shutdown had also led to a sharp reduction in spot volumes exported by the supplier to China during March and April.

At the same time, it was heard that increased amounts of Group II base stock had moved into China from the Hyundai Oilbank-Shell plant in Daesan, South Korea, which started production last year.

Availability in China is also expected to improve as a couple of base oil plants are likely to bring new production to the market in the next couple of months.

Sinopec subsidiary Nanjing Petrochemical – which had originally been slated to bring its new base oil plant on stream in April – is now expected to introduce 200,000 t/y of Group II oils in May, according to sources.

Significant volumes of Group II are also anticipated to make their way to China from ExxonMobil’s expanded facility in Singapore in coming months, sources commented.

While the exact amount of the expansion was not disclosed by the refiner, there is talk that the additional capacity could be above 300,000 t/y. The expansion work at the refinery was heard to have been completed, but product has not been shipped out yet, according to sources.

Aside from price increases for the Group II heavy-vis cuts, within the Group I segment, bright stock has been in the spotlight, with supply deemed tight in the U.S., Europe, and Asia and prices edging up as a result. Increases in Asia have ranged from $10/t-$30/t in recent weeks.

Some of the price assessments for Asian base oils were revised this week to reflect current buying and selling ideas, but trading was not very brisk on account of the Golden Week/Labor Day holidays celebrated in a number of countries.

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

On an FOB Asia basis, Group I SN150 was mentioned at $550/t-$580/t FOB, while SN500 was slightly higher by $10/t at $630/t-$650/t FOB. Bright stock prices were also up by $10/t at $1,040/t-$1,060/t FOB.

Within the Group II category, prices for 150 neutral softened slightly by $10/t to $570/t-$610/t FOB Asia, and climbed by $10/t to $680/t-$720/t FOB Asia for 500N.

There were few changes noted in the Group III segment, with supply deemed more than adequate to cover requirements. The 4 centiStoke and 6 cSt oils were unchanged at $920/t-$950/t FOB Asia, and the 8 cSt grade at $730/t-$750/t FOB Asia.

On the shipping front, there was a bevy of fresh inquiries to move product from South Korea in May. A 1,800-metric ton cargo of four base oil grades was expected to be shipped from Ulsan to Dongguan, China, in early May. A 1,000-ton lot was being discussed for Yeosu to Merak for May 20-30 shipment. A second 1,000-ton parcel was likely to move from Yeosu to Ho Chi Minh, Vietnam, on May 5-20. A 1,300-ton lot was on the table for Yeosu to Tanjung Priok, Indonesia, for May 10-15 shipment. A 1,500-ton cargo of two grades was being worked on for Yeosu or Ulsan to Gebze, Turkey, for May 20-30 lifting. A 9,600-ton parcel of seven grades was quoted for Yeosu to Mumbai and Ennore, India, for May 20-28 shipment.

Lastly, a 2,000-ton lot was being discussed for Negishi, Japan, to China for mid-May shipment.

Upstream, June ICE Brent Singapore futures were trading at $66.70 per barrel in afternoon trading on May 4, compared to $62.42 per barrel on April 23.

Gabriela Wheeler can be reached directly

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