Asia Base Oil Price Report


A snug supply and demand balance and robust crude oil prices are supporting stable-to-firm base oil pricing in Asia, with June spot transactions mostly finalized and attention turning to July discussions.

Steady requirements and reduced production at regional facilities have brought about a tightening of a number of base oil cuts, but this situation may not last in the long term as the market is intrinsically oversupplied, participants commented.

A number of base oil units have cut back production rates due to falling margins or because of technical issues since the beginning of the year, while some facilities have been undergoing maintenance, which has led to reduced availability of several grades. The heavy-vis cuts in both the API Group I and II segments, in particular, were described as tight.

Spot prices have therefore moved up over the last three months, but this upward trend may slow down as the less active season for base oils approaches and additional supply comes on stream.

Participants said they expected the impact of added product from the ExxonMobil expansion in Singapore to become more evident in the market in coming months. Following the completion of its Jurong base oil refinery expansion earlier this year, the company is able to manufacture additional Group II EHC 50 and EHC 110 oils, while it continues to produce Group I base stocks, including bright stock, a company source said in a statement.

According to the source, additional Group II products became available from the ExxonMobil Singapore refinery in January of this year, but market players said that it has been in the last couple of months that the added tonnage has become more noticeable.

Asian suppliers have been concerned because buyers have been hesitant to commit to large cargoes as they speculated that prices could stall, or even reverse course in coming weeks, as demand generally starts to taper off when the strong spring season nears its conclusion.

Additionally, the approach of the monsoon season in India has tempered demand for base oils from the lubricants sector. Buyers appeared to be holding out for lower offers, and were not pressured as they felt comfortable with ample inventories.

Output is also anticipated to improve in Asia in coming weeks with the restart of several units which have been undergoing turnarounds.

Idemitsu Kosan and Cosmo Oil in Japan were expected to resume production in late June/early July, following routine turnarounds. Idemitsu Kosan produces Group I, II and III oils, while Cosmo Oil manufactures Group I base stock.

In China, Fushun Petrochemical was also likely to restart its Group I plant in July, following a maintenance shutdown.

Meanwhile, Panjin Northern Asphalt was heard to be planning to shut down its 400,000 metric tons per year Group II plant at the end of June for a one-month turnaround. The producer is also slated to add production of 300,000 t/y naphthenic oils at its plant in Panjin, Liaoning province, by the end of 2016.

The heavy-vis and bright stock oils within the Group I category continued to be the focus of many discussions in the market over the week, with steeper offers in the ex-tank Singapore market meeting with some resistance.

Selling ideas at around $1,120/t ex-tank were countered with buying indications at $1,100/t-$1,110/t, while SN500 was discussed at levels around $780/t-$800/t ex-tank. Buyers’ ideas were around $10/t-$20/t below prevailing offer levels.

Northeast Asian Group I material was heard on offer at $590/t-$600/t FOB Asia for SN150, while SN500 was mentioned above $700/t FOB, but quantities on offer were limited as most suppliers reported almost sold-out positions.

Similarly snug conditions were reported for Group II oils, resulting in very little product changing hands during the week.

Based on the latest discussions, price ranges were assessed generally stable-to-firm, with the Group III indications said to be largely notional as no fresh transactions were reported.

On an ex-tank Singapore basis, Group I SN150 prices were steady at $660/t-$680/t, SN500 was assessed up by $10/t at $780/t-$800/t, and bright stock was unchanged at $1,110/t-$1,130/t.

On an FOB Asia basis, Group I SN150 was heard at $560/t-$590/t, SN500 was steady at $680/t-$700/t FOB, and bright stock prices held at $1,080/t-$1,100/t FOB.

Within the Group II realm, prices for 150N were assessed at $580/t-$610/t FOB Asia, and prices for 500N were steady at $720/t-$740/t FOB Asia.

In the Group III segment, 4 centiStoke and 6 cSt oils remained at $920/t-$940/t FOB Asia, while the 8 cSt grade was holding at around $700/t-$720/t FOB Asia.

In terms of shipping, a number of fresh inquiries emerged, mostly aimed at moving base oils from South Korea. A 1,300-metric ton cargo was discussed for Onsan to Huizhou and Dongguan, China, for the second half of June shipment. A 500-ton lot was expected to be shipped from Yeosu to Taichung, Taiwan, between July 1 and July 5. A 3,000-ton parcel of two grades was on the table for Yeosu to Mesaieed, Qatar, for first week of July lifting. A second 3,000-ton lot of three grades was likely to cover Yeosu to Ennore, India, for shipment by June 25. A 3,850-ton cargo of five grades was being worked on for Yeosu to Mumbai, India, for June 15-23 lifting.

Elsewhere, a 1,000-1,200-ton parcel of SN500 was expected to be shipped from Sriracha, Thailand, to Taichung at the end of June.

Upstream, August ICE Brent Singapore futures were trading at $63.46 per barrel in afternoon trading on June 22, compared to $63.61 per barrel for July futures on June 15.

Gabriela Wheeler can be reached directly

Related Topics

Base Oil Pricing Report    Base Stocks    Other