Asia Base Oil Price Report

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Prices of a number of base oil cuts edged down in Asia on tepid demand and plentiful availability, while see-sawing crude oil values exerted additional pressure.

Crude oil prices were significantly up early in the week, but fell on sluggish macroeconomic data out of the United States., stifling the bullish sentiment fueled by U.S. crude inventory builds that came in lower than expected.

Base oil orders have slowed as November cargo discussions get underway, with buyers expecting to see lower offers emerging on bearish fundamentals.

While a few producers are still working out details for their November offers, reports that a major Southeast Asian refiner had adjusted down its list prices started to circulate.

According to sources, the producer lowered the price of its API Group I and II base oils as of Oct. 27.

It was heard that the producer’s Group I solvent neutral 150 would be trimmed U.S. dollars $20 per metric ton, while its SN600 dropped a more substantial $45/t. The supplier’s bright stock underwent a similar price cut as its SN150 grade of $20/t.

The producer was also heard to have reduced its Group II 150N grade by $20/t and its 500N oil by $30/t. These price revisions could not be confirmed with the producer.

The large refiner’s price movements are often seen as a bellwether for Asian price trends, and the markdowns were mirrored by other reduced bids and offers in the region.

There were reports that buying and selling ideas for Asian exports of Group I and Group II oils had been revised down from last week by around $20/t for November cargoes. Prices were understood to be hovering around $660/t-$680/t FOB Asia for the 500/600N cuts, for instance, although some offers at higher levels near $700/t were also noted, but thought too high to be workable.

While supply of the high-viscosity grades had been tight throughout the year, availability was said to be easing due to reduced seasonal demand of these cuts, coupled with increased output levels of the heavy oils in recent months.

Given that requirements for the lighter grades have risen for blending of fall/winter lubricant formulations, producers are less willing to grant price reductions on these grades.

It was also heard that Group III producers had so far been holding on to unchanged price levels, but the region is oversupplied and offers were heard to be edging down, although the amount of the decreases was difficult to assess.

There was also talk that Asian Group III suppliers were offering product at very competitive prices into India and South Africa, as some consumers are able to use Group III in applications that typically call for Group II/II+ oils.

Following this week’s downward Group I and II price adjustments by the major Southeast Asian refiner, and lower buying and selling ideas for November shipments, Asian base oil prices have been assessed as stable to soft.

On an ex-tank Singapore basis, Group I SN150 prices were assessed at $560/t-$580/t, down $20/t, while SN500 was heard at $660/t-$680/t, reflecting a $30/t drop. Bright stock was also lower by $20/t at $980/t-$1,000/t.

Group II 150N values were lower by $20/t at $540/t-$560/t ex-tank Singapore, while the 500N cut was revised down by $30/t to $710/t-$730/t.

On an FOB Asia basis, Group I SN150 was unchanged at $500/t-$540/t, SN500 was lower by $10/t at $590/t-$610/t FOB, and bright stock was also down $10/t at $920/t-$950/t FOB.

Within the Group II category, prices for 150N were steady at $490/t-$520/t FOB Asia, while 500N was adjusted down $20/t at $660/t-$680/t FOB Asia.

In the Group III segment, prices were notionally adjusted down, given the downward trend of base oil prices in Asia. The 4 centiStoke and 6 cSt oils were lower by $20/t at $880/t-$910/t FOB Asia, while the 8 cSt grade was down $10/t at $650/t-$670/t FOB Asia.

Base oil shipping activity was relatively steady, with a number of inquiries surfacing to move product ex-Japan, and the usual flow of products from South Korea to different destinations in Asia.

In Japan, a 2,500-ton cargo was quoted for Mizushima to Singapore for Nov. 1-5 shipment. A 1,500-ton lot was expected to be shipped from Kainan to Port Klang, Malaysia, for Nov. 13-15 lifting. A 1,000-ton parcel was being worked on for Yokkaichi to Manila, Phillippines, for Nov.16-20 shipment.

In South Korea, a 2,000-ton (plus or minus 5 percent) cargo was on the table for Onsan to Tianjin for early Nov. lifting. A 1,500-ton lot of two base oil grades (1,000 tons plus 500 tons) was expected to cover Yeosu to Merak, Indonesia, for Nov. 7-10 shipment. A 1,700-ton lot of two grades (700 tons plus 1,000 tons) was being worked on for Yeosu to Tanjung Priok, Indonesia, for Nov. 12-20 lifting. A 5,000-ton cargo was quoted for Yeosu to Mumbai, India, for second half of November dates. A 2,000-ton parcel was likely to be shipped from Yeosu to Jiangyin, China, on Nov. 20-30. A 1,000-ton parcel was being discussed for Yeosu to Nantong, China, for Nov. 11-25 lifting. A 3,000-ton cargo was expected to be shipped from Yeosu to Taichung and Anping, Taiwan, between Nov. 24-28.

Lastly, a 3,000-ton parcel of two grades was mentioned for Sriracha, Thailand, to Chittagong, Bangladesh, for first half of November shipment.

December ICE Brent Singapore futures were trading at $49.25 per barrel in afternoon trading on Nov. 2, compared to $48.03 per barrel on Oct. 26.

Gabriela Wheeler can be reached directly atgabriela@LubesnGreases.com

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