Asia Base Oil Price Report


Base oil sellers, buyers and traders in Asia are paying close attention not only to crude oil price fluctuations, but to global economic and political issues, as local markets are being affected by developments within the European Union, the Middle East, the United States and China.

Market sources in various countries said that economic uncertainties were affecting exports of different products, and that this, in turn, was impacting the finished lubricants segments.

In Taiwan, participants commented that the industrial segments were suffering because export volumes had been decreasing over the last four months, with the trend becoming more pronounced in July.

This situation has led to a softening in lubricant demand, which in turn is likely to impact base oil requirements, sources explained.

Another factor that was making consumers nervous were the fluctuations in crude oil pricing. Given that crude oil levels have dropped from June, participants expected that base oil prices would come under pressure.

At the same time, buyers have only been securing small base oil cargoes as they prefer not to be caught with lots of high-priced inventories, should base oil prices edge down.

“Now we have to be careful about the market situation and reduce the stock levels,” a source commented.

While Taiwanese API Group II producer Formosa increased domestic prices for its 70N and 150N grades by Taiwan New Dollar (TWD) 0.1/liter and TWD 0.58/liter for its 500N cut since early July, buyers doubted that the uptrend would be sustained in coming months.

The light-viscosity grades are generally more readily available in Asia, and likely to come under pressure, while the high-vis cuts are still in tighter supply, with prices of the heavier cuts having moved up in recent months.

Taiwanese market participants also explained that there were not many offers of imports on the table, and that suppliers were reluctant to mention firm numbers, adding that they seemed open to negotiations.

In China, base oil consumers are also hesitant to acquire large volumes and traders are prudent when it comes down to committing to short-term cargoes, sources said.

Market players are concerned that sharp swings in the Chinese stock markets and an economic slowdown will continue to impact base oil demand negatively, while requirements typically also decrease in the fall.

A similarly cautious stance to that seen in other Asian countries has been adopted by Japanese consumers, despite the fact that prices of both base oils and lubricants have seen very moderate variations month on month.

Base stock values have fallen slightly since the beginning of July because these numbers are formula-based and linked to the import prices of crude oil.

According to sources, base oil prices from producers JX Nippon and Idemitsu dropped by approximately Yen (JPY) 7/liter from early July to reflect the movement of crude oil import prices.

At the same time, it was heard that Idemitsu had raised its lubricant prices by about JPY 10/liter in July. Lubricant manufacturers in general reported flat demand with few changes noted over the last couple of months.

In India, tight availability of Group I oils has led to increases by local producers in July against June , with SN70 and SN150 inching up by Indian Rupees (INR) 0.70/liter, while the SN500 experienced hikes of INR 1.20/liter and bright stock of INR 1.60/litre.

Base oil prices in Asia were assessed as largely unchanged this week, as business was generally muted.

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

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

Within the Group II category, prices for 150N were holding at $585/t-$620/t FOB Asia, and prices for 500N were steady at $725/t-$750/t FOB Asia.

Within the Group III segment, the 4 centiStoke and 6 cSt oils were assessed at $920/t-$940/t FOB Asia, while the 8 cSt grade was heard at $700/t-$720/t FOB Asia.

In terms of shipping activity, several inquiries involving movements of base oils ex-South Korea emerged during the week. A 3,850-metric ton cargo of four grades was being worked on for prompt shipment from Yeosu to Mumbai, India. A 500-ton lot was expected to be shipped fromYeosu to Nantong, China, betweenJuly 16-29. A 1,500-ton parcel was being worked on for Yosu to Merak, Indonesia, forJuly 28-31 lifting. A 1,500-ton lot of tow grades was likely to move from Yeosu to Tanjung Priok, Indonesia, for Aug. dates. A 1,000-ton cargo was discussed for Yeosu to Ho Chi Minh, Vietnam, for Aug. 10-15 shipment. A 2,700-ton parcel was quoted for Yeosu to Ennore, India, for prompt shipment.

A 5,000-ton lot was on the table for Ulsan to Tianjin, China, for prompt shipment.

Lastly, a 2,000-ton cargo was likely to be shipped from Negishi, Japan, to Manila, Philippines, between July 23-27.

Upstream, August ICE Brent Singapore futures were trading at $57.10 per barrel in afternoon trading on July 20, compared to $57.65 per barrel on July 13.

Gabriela Wheeler can be reached directly

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