Asia Base Oil Price Report


The Asia base oils market witnessed further price decreases this week on the back of weaker feedstock prices and lackluster demand, with the celebration of holidays in several countries also dampening trade.

Brent crude oil prices have been trading within a narrow range in the last few days, hovering just below U.S. dollars $50 per barrel, but seem to be on precarious ground as global oversupply continues to be a concern.

November ICE Brent Singapore futures were trading at $48.30 per barrel in afternoon trading on Sep. 28, compared to $47.76 per barrel on Sep. 21.

Base oil pricing has steadily declined over the last few weeks, and buyers felt that there was still a possibility that prices may move lower as feedstock values remain volatile, and base oil demand is fairly weak.

An upsurge in manufacturing rates was expected following the Autumn Festival and National Day holidays observed in countries such as China, South Korea, Japan, and Taiwan in late September/early October. Activity was anticipated to pick up as participants return to their work places, but usually starts to taper off again ahead of the year-end holidays.

As a result, most buyers were heard to be securing product for short-term usage and were avoiding an inventory build-up. Suppliers were rather optimistic and expected October to be a good month in terms of base oil sales, as many consumers had reduced their stock levels ahead of the holidays and needed to replenish inventories.

The onset of colder weather was likely to result in improved buying interest for the lower-viscosity grades, used in blending applications in the fall/winter season, and dampen appetite for the heavier cuts.

The need to manage inventories during the typical seasonal slowdown, coupled with falling crude values, have driven suppliers to adjust prices down repeatedly in the last two months. As a result, margins have been squeezed and production is close to a break-even point or below for some grades, according to producers.

Current market sentiment and uncertainties, together with currency fluctuations in most countries, have led to further decreases this week, with a major Southeast Asian refiner heard to have lowered its ex-tank Singapore prices for a second time since the beginning of September.

According to sources, the producer trimmed its API Group I and II prices on Sep. 24. Talk pointed at decreases of $20 per metric ton for Group I solvent neutral 150 and SN600, and $40/ton for bright stock.

For the producer’s Group II cuts, it was heard that price cuts of $30/ton had been applied to the 150 neutral cut, as well as to the 500N.

But there were conflicting reports as some buyers may be seeing differing reductions, depending on contract terms, volumes, and other specifications. Some talk pointed at bright stock decreases of up to $60/ton. There was no producer confirmation forthcoming about the decreases.

In India, prices have also experienced downward adjustments because regional suppliers have to compete with material of Middle East origin, which has been on offer at attractive price points. Prices of Group I SN150 were understood to be around $480-500/ton CFR India, while indications for SN500 were heard near $500-520/ton CFR.

In general terms, some base oil price ranges in Asia remained stable this week, while others have declined on the back of producers’ lower offer levels, weakening buying indications, and ample availability.

On an ex-tank Singapore basis, Group I SN150 prices were unchanged at $600/t-$620/t, while SN500 was assessed lower by $30-40/ton at $730/t-$750/t, in line with the latest price discussions. Bright stock was also assessed lower by $40/ton at $1,010/t-$1,030/t.

Group II values were heard around $610-630/ton ex-tank Singapore for 150N, and $750-780/ton for the 500N cut.

On an FOB Asia basis, Group I SN150 was heard at $490/t-$540/t. SN500 was lower by $30/ton at $630/t-$650/t FOB, and bright stock also down by $30/ton at $950/t-$980/t FOB.

Within the Group II category, prices for 150N were holding at $500/t-$520/t FOB Asia. Prices for 500N were assessed down $20/ton at $690/t-$710/t FOB Asia.

In the Group III segment, the 4 centiStoke and 6 cSt oils were revised up to better reflect current indications at $900/t-$930/t FOB Asia, while the 8 cSt grade was heard at $660/t-$680/t FOB Asia.

On the shipping front, the number of inquiries seemed to be rather limited, possibly due to regional holidays. For shipments ex-South Korea, a 2,400-metric ton cargo of four base oil grades was being discussed for Onsan to Yingkou, China, for prompt shipment. A 1,750-ton lot, also composed of four grades,was expected to cover Yeosu or Ulsan to Mumbai, India, for Sep. 20-Oct. 10 lifting, while a 3,300-ton parcel of three grades was still on the table for Yeosu or Ulsan to Chennai, India, for the same dates. A 600-ton lot was likely to be shipped from Onsan to Taicang, China, in late Sep./early Oct. A 1,400-ton cargo of four grades was on the table for Onsan to Dongguan-Shui Dong, China, for late Sep./early Oct. dates.

Gabriela Wheeler can be reached directly

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