The slowdown is attributed to a contraction in economic growth and the country’s drive to limit car ownership to reduce traffic congestion and air pollution.

Passenger vehicle sales in China grew at the slowest pace since 2012 between January and September this year, prompting the government to cut taxes on certain car purchases to stimulate demand. The purchase tax on vehicles with engines 1.6 liters or smaller was slashed by half to 5 percent, effective Oct. 1 through the end of next year. These small cars account for more than 60 percent of Chinas car market, according to industry data.

September passenger car sales were up 3.3 percent from a year earlier, to 1.75 million vehicles, while October car sales showed a marked improvement as the tax cut kicked in, with 2.22 million vehicles sold, representing an 11.8 percent rise year-on-year, according to a report by the China Association of Automobile Manufacturers.

Nevertheless, the auto market is not expected to grow at the double-digit rates seen in the past three to four years, a Bloomberg report noted. CAAM reported that sales rose by 6.9 percent in 2014, compared with a 13.9 percent growth a year earlier. Total sales for 2015 are expected to climb by around 3 percent compared to 2014 figures.

It is also difficult to assess whether conditions in the industrial segment will improve with the start of the new year, as demand typically remains lackluster during and right after the year-end holidays, when many manufacturers idle plants temporarily and prefer to carry low stocks.

As a result, base oil sellers are bracing for more downward price pressure in January.

However, the arrival of spring and the Lunar New Year holidays starting Feb. 8 could prompt buyers to restock depleted inventories before the celebrations begin, kick-starting a much needed improvement in base oil demand.

In the meantime, trading remains muted, with buyers countering sellers’ offers with much lower price ideas, often resulting in a gap of at least U.S. dollars $20 per metric ton.

The current uncertainties are also driving base oil producers to slow down the start-up process of new base oil facilities, as is the case of Sinopec Nanjing’s new base oils unit in Jiangsu province.

The plant, which will have a nameplate capacity of 200,000 metric tons per year of API Group II base oils, is currently undergoing test runs and is not producing at full rates, market sources said. The plant had been expected to start up in April this year, but the process was postponed several times due to market economics.

Participants were also keeping an eye on crude oil prices, which had been on a downward trek the previous two weeks, and reversed course on escalating tensions about the Middle East and the downing of a Russian jet by Turkey.

January ICE Brent Singapore futures were trading at $44.65 per barrel in afternoon sessions on Nov. 30, compared to $43.75 per barrel on Nov. 23.

Base oil values were assessed stable-to-soft week-on-week, as discussions were taking place at lower price levels.

On an ex-tank Singapore basis, Group I SN150 prices were unchanged at $540/t-$560/t, while SN500 was down $10/t at $610/t-$630/t. Bright stock also was assessed down $10/t at $950/t-$970/t.

Group II 150N values were steady at $540/t-$560/t ex-tank Singapore, while the 500N was assessed down $10/t at $660/t-$680/t.

On an FOB Asia basis, Group I SN150 was holding at $470/t-$500/t, SN500 was heard at $570/t-$590/t FOB, and bright stock reflected a $10/t drop at $890/t-$920/t FOB.

In the Group II category, prices for 150N were unchanged at $470/t-$490/t FOB Asia, while 500N was hovering at $600/t-$630/t FOB Asia, reflecting a $10/t drop at the high end of the range.

The 4 centiStoke and 6 cSt oils in the Group III segment were unchanged at $870/t-$900/t FOB Asia, while the 8 cSt grade was at $640/t-$660/t FOB Asia on very thin discussions.

Shipping activity was decidedly less energetic than the previous week, with only a few inquiries to move product from South Korea emerging.

A 500-metric ton cargo was quoted for Yeosu to Nantong, China, for Dec. 5-10 lifting. A second 500-ton lot was being discussed for Yeosu to Singapore for prompt shipment. A 1,000-ton parcel of 600N was on the table for Yeosu to Zhenjiang, China, for Dec. 1-5 lifting. A 2,000-ton cargo made up of 1,000 tons of 150N and 1,000 tons of 600N was likely to be shipped from Yeosu to Jiangyin, China, for prompt dates.

Gabriela Wheeler can be reached directly atgabriela@LubesnGreases.com