Asia Base Oil Price Report


Base oil prices in Asia continue to face downward pressure on lackluster demand, ample availability, and suppliers’ need to draw down inventories before the year ends.

The downward trend was evidenced by a second round of price decreases implemented by a major Southeast Asian refiner in the lapse of two weeks.

According to sources, the refiner has reduced the list price of its high viscosity grades in the API Group I and II categories during the week. The producer’s Group I solvent neutral 600 cut was heard to have been lowered U.S. dollars $30 per metric ton, while its Group II 500 neutral was trimmed $20/ton. The reductions were said to have become effective Nov. 6.

Only about a week earlier, on Oct. 27, the refiner had cut Group I SN150 $20/ton and its SN600 $45/t, while the price of bright stock was lowered $20/t.

Within the Group II category, the producer had also reduced its Group II 150N grade by $20/t and its 500N oil by $30/t at the end of October, according to sources. As a result of the two price decreases, the SN600 cut dropped $75/ton and the 500N oil dipped $50/ton since last month.

The reductions are a reflection of suppliers’ strong drive to get orders in, sources said, as producers like to avoid carrying high inventories into the new year.

Some participants also commented that margins have been squeezed over the last few months, especially since crude oil prices have moved up again, and that there did not seem to be any room for further decreases.

However, other sources were of the opinion that suppliers appeared intent on protecting market share, rather than improving profits.

This situation appears to be especially noticeable in the Group II segment as supply is plentiful and competition is quite strong, sources added.

One possible outlet for Group II volumes might be found in China, sources said, as Group I supplies have become tight because a large Chinese producer idled its base oil plant in late October.

It was heard that the Sinopec Beijing Group I plant had been shut down due to a lack of feedstocks, and it could not be ascertained when the unit would restart.

Consequently, consumers who had been receiving product from the plant have had to look for alternative sources of base stock, and many are utilizing Group II oils in Group I applications that allow substitution. Aside from domestic supply, buyers were heard to be considering imports from Taiwan and South Korea.

Additionally, the price premium that Group II oils used to enjoy as compared to Group I cuts has almost disappeared, and end-users naturally prefer to use the higher performance base oils if prices are similar, sources said.

Base oil prices were generally softer week-on-week, with bids and offers edging down, although the lighter grades seemed to be holding their ground better than the heavy-viscosity cuts.

On an ex-tank Singapore basis, Group I SN150 prices were assessed unchanged at $560/t-$580/t, while SN500 was heard at $640/t-$660/t, reflecting a $20/t reduction. Bright stock was holding at $980/t-$1,000/t.

Group II 150N values were steady at $540/t-$560/t ex-tank Singapore, while the 500N cut was revised down by $20/t to $690/t-$710/t.

On an FOB Asia basis, Group I SN150 was unchanged at $500/t-$540/t, SN500 edged down $20/t at $570/t-$590/t FOB, and bright stock was also down by $10/ton at $910/t-$940/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 $640/t-$660/t FOB Asia.

In the Group III segment, prices were largely unchanged on a lack of reported transactions. The 4 centiStoke and 6 cSt oils were hovering at $880/t-$910/t FOB Asia, while the 8 cSt grade was heard at $650/t-$670/t FOB Asia.

On the shipping front, activity seemed to pick up as the week progressed.

There were several inquiries to move product from South Korea, including a 2,000-metric ton lot made up of 1,000 tons of 150N and 1,000 tons of 600N for Yeosu to Jiangyin, China, for Nov. 22-30 lifting. A 3,000-ton parcel of five grades was expected to be shipped from Yeosu to Nantong, China, between Nov. 11-15. A 5,000-ton parcel was quoted for Yeosu to Mumbai, India, for 2H Nov. shipment. A 3,500-ton cargo was being worked on for Yeosu to Taichung and Mailiao, Taiwan, for Nov. 23-28 lifting. A 500-ton lot was expected to be shipped from Yeosu to Singapore during 2H Nov, arriving after Dec. 7. A 10,000-ton cargo of three or four grades was on the table for Ulsan to Taichung, Taiwan, for Nov. 10-15 shipment. A 1,000-ton lot of two grades was mentioned for Ulsan to Dongguan, China, for Nov. 16-20 dates.

There was also a 1,500-ton no-heating baseoil cargo quoted for Mailiao to Gebze, Turkey, and a 3,000-ton cargo of two grades was still on the table for Sriracha, Thailand, to Chittagong, Bangladesh, for first half of November shipment.

December ICE Brent Singapore futures were trading at $47.59 per barrel in afternoon trading on Nov. 9, compared to $49.25 per barrel on Nov. 2.

Gabriela Wheeler can be reached directly

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