Asia Base Oil Price Report


Participants in Asia continued to exercise caution in light of sliding crude oil values and lukewarm demand from downstream lubricant segments.

Both buyers and sellers were keeping an eagle eye on crude oil and feedstock prices, as Brent numbers have dipped to the $50s per barrel and are flirting with lows last seen in March.

Crude oil has dropped more than U.S. $10 per barrel over the past month amid a global supply glut, strengthening dollar, and recent stock market fluctuations in China.

Base oil buyers are holding off on purchasing large cargoes on concerns that base stock prices could be exposed to downward pressure, and prefer not to risk accumulating high-priced material.

Producers remain somewhat confident that base oil values will retain some stability as many cuts are still in tight supply. This is especially the case of the high-viscosity cuts such as solvent neutral 500 and bright stock within the API Group II category, and the 500/600 neutral cut within Group II.

Some suppliers continue to sell the low-vis and high-vis grades in a bundle as a means of moving inventories of the low-vis cuts, which have been mounting.

A number of producers were also heard to have changed the production ratio of the low-vis cuts, favoring the high-vis grades, which appear to be in higher demand.

However, this situation could change with the approach of the fall season, when colder temperatures result in higher requirements for the light-viscosity grades versus their heavier counterparts for the manufacture of winter lubricants formulations.

In China, traders were heard to have delayed the loading of some of their cargoes from July to August given tempered demand from downstream segments. End-user requirements for finished lubricants have weakened on economic uncertainties, and some lube manufacturers have even reduced output to avoid bulging inventories.

Meanwhile, demand from some Southeast Asian countries has picked up slightly, following a period of subdued activity during the Ramadan and Eid al-Fitr holidays in late June/July.

Price ideas of the heavy-vis cuts were said to be exposed to upward pressure given the recent increase sought by a major Southeast Asia refiner on its ex-tank Singapore prices.

The refiner will be lifting the list price of its Group I solvent neutral 600 by $20 per metric ton as of Aug. 7, according to sources.

Concurrently, the producer was heard to have lowered the price of its Group II 150 neutral by $20/t on July 28. No producer confirmation could be obtained about these adjustments.

In India, on the other hand, base oil prices remained flat on lukewarm buying interest and plentiful availability. Group I SN150 was heard hovering at $600/t-$620/t CFR India, while SN600 was near $610-630/t CFR. The monsoons were understood to be affecting logistical operations in the country, playing a part in the subdued appetite for base oils.

Despite differences in conditions within the different countries, a majority of base stock prices in Asia appeared to be in a state of flux, with values for some cuts softening on lower buy/sell ideas, and some cuts inching up on limited availability and higher offers.

All of these developments are making consumers jittery, with transactions mostly limited to buyers looking to replenish inventories and meeting immediate requirements through smaller cargoes.

On an ex-tank Singapore basis, Group I SN150 prices slipped by $10/t at the low end of the prevailing range to $640/t-$670/t, while SN500 edged up by $20/t to $800/t-$820/t. Bright stock was also assessed higher by $20/t at $1,130/t-$1,150/t.

On an FOB Asia basis, Group I SN150 was assessed unchanged at $550/t-$580/t, although sources said that the low buying ideas reflected at the bottom of the range were not quite workable in the current market. SN500 and bright stock moved up by $20/t to $710/t-$730/t FOB, and $1,100/t-$1,120/t FOB, respectively.

Within the Group II category, prices for 150N were assessed $5/t-$20/t lower at $580/t-$600/t FOB Asia, and prices for 500N were unchanged at $730/t-$755/t FOB Asia.

Within the Group III segment, the 4 centiStoke and 6 cSt oils were revised to reflect current price ideas at $910/t-$930/t FOB Asia, while the 8 cSt grade was lower as well at $680/t-$700/t FOB Asia.

There was slightly more activity on the shipping front this week, but it was still quite feeble compared to a month ago, with a 5,000-6,000-metric ton cargo being discussed for Yeosu, South Korea, to Mumbai, India, for Aug. 15-25 shipment. A 1,500-ton lot was expected to be shipped from Yeosu to Nantong, China, for early Aug. dates. A 2,000-ton parcel was being worked on for Mailiao, Taiwan, to Ennore, India, for Aug. 25-31 shipment.

A 4,000-ton cargo was also on the table from Hamriyah, United Arab Emirates, to West Coast India for prompt shipment.

Lastly, a 6,000-ton parcel was quoted for Bushire, Iran, to West Coast India for prompt lifting.

Upstream, September ICE Brent Singapore futures traded at $50.96 per barrel in afternoon trading on Aug 3, compared to $54.33 per barrel on July 27.

Gabriela Wheeler can be reached directly

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