Asia Base Oil Price Report


Prices for a number of base oil cuts weakened further this week as October negotiations got underway.

Recent crude oil price fluctuations, lukewarm demand, and plentiful availability continued to exert pressure on base oils. A number of producers adjusted list prices down for October business, hoping to attract more orders and work down inventories.

It was heard that Taiwanese producer Formosa Petrochemical had lowered the list prices for its October shipments, in an attempt to foster domestic sales and remain competitive against potential imports.

Formosa was heard to have dropped its API Group II 70 neutral grade by an equivalent of approximately U.S. $10 per metric ton, while its 150N edged down about $8/t. The producer’s 500N was understood to have been trimmed by around $11/t-$12/t.

Values for the light-viscosity grades, both in the Group I and II categories, had been under more pressure than the high-vis cuts in recent months because of ample supply and lackluster buying appetite.

However, with the start of the fall/winter season, demand for the lighter grades has started to improve as blenders utilize these cuts for their cold weather formulations, particularly for the manufacture of engine oils.

At the same time, heavy-vis oils are expected to maintain some of their premium over light-vis oils because they have been in tight supply during the first half of the year, and a number of producers had actually favored output of the heavy cuts versus that of the light-vis grades.

Earlier in the year, there had also been an influx of heavy-vis cargoes from the U.S. into key markets such as India. However, given the tightening of U.S. supplies of the higher-vis grades, there have been fewer volumes moving to Asia.

In fact, given that U.S. prices are said to be currently higher by more than $200/t above those seen in Asia, according to sources, and that there is ample South Korean and Taiwanese supply, there is speculation that some Asian cargoes could move to the U.S., although no specific movements were noted.

A Southeast Asian refiner also trimmed its ex-tank list prices at the end of September, and this has triggered similar adjustments, not only for general ex-tank Singapore values, but also in the wider exports markets in Asia.

Within the Group I category, the SN150 cut was heard to have slipped by around $20/t-$30/t on an ex-tank Singapore basis moving into October, while the SN500 cut has also declined by around $30/t.

As a result of these adjustments, and the general market sentiment in Asia, most price assessments have been lowered this week. Discussions were also based on published price ranges widely accepted as benchmarks by the industry.

On an ex-tank Singapore basis, Group I SN150 prices were assessed lower by $20/t at $580/t-$600/t, while SN500 was down by $30/t at $700/t-$720/t. Bright stock was notionally assessed lower by $10/t at $1,000/t-$1,020/t.

Group II 150N values also edged down by $10/t to $600/t-$620/t ex-tank Singapore, while the 500N cut remained unchanged at $750/t-$780/t.

On an FOB Asia basis, Group I SN150 was heard at $500/t-$540/t. SN500 was lower by $30/t at $600/t-$620/t FOB, and bright stock also down by $20/t at $930/t-$960/t FOB.

Within the Group II category, prices for 150N were unchanged at $500/t-$520/t FOB Asia, while 500N was also steady at $690/t-$710/t FOB Asia, following downward adjustments the previous week.

In the Group III segment, the 4 centiStoke and 6 cSt oils were holding at $900/t-$930/t FOB Asia, while the 8 cSt grade was heard at $660/t-$680/t FOB Asia.

Participants have been monitoring inventories very carefully in order to avoid product overhang, and to that effect, aside from promoting sales, a number of producers have also adjusted operating rates at their base oil plants.

A couple of delayed plant restarts have also been reported, while some plants were expected to be shut down for maintenance.

In China, Panjin Northern Asphalt had been expected to restart its plant in Liaoning province in July/August, following a routine turnaround, but the restart was delayed to the end of September although it could not be ascertained whether the unit had actually been brought back on line as planned. The plant can manufacture 400,000 metric tons per year of Group II base oils.

Also in China, Sinopec’s 300,000 t/y Group I base oils unit in Beijing was slated for a one-month turnaround, starting in late September.

Shipping activity has been subdued, likely because of regional holidays celebrated in late September or early October, with only a handful of inquiries to move product ex-South Korea and one inquiry ex-Japan surfacing during the week. A 3,500-ton cargo of four base oil grades was being discussed for Yeosu to Nantong, China, for Oct. 8-13 lifting. A 4,000-ton lot was likely to be shipped from Yeosu to Sharjah, United Arab Emirates, between Oct. 15-20. A 4,400-ton parcel was on the table for Yeosu to Mesaieed, Qatar, also for Oct. 15-20 lifting. A 5,000-ton cargo was mentioned for Yeosu to Mumbai, India, for second half of October lifting.

Lastly, a 3,000-ton lot was quoted for Yokkaichi, Japan, to South China for Oct. 25-29 shipment.

Upstream, November ICE Brent Singapore futures were trading at $48.65 per barrel in afternoon trading on Oct. 5, compared to $48.30 per barrel on Sep. 28.

Gabriela Wheeler can be reached directly

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