Prices for a majority of base oil cuts have plummeted about 40 percent since last June, and players were still reeling from almost-daily adjustments.

Within the Group II, for instance, 150 neutral prices were hovering at $1,010-1,050 per metric ton FOB Asia in mid-June 2014, but were substantially down to $600-640/t FOB this week.

Group II 500N fell from $1,050-1,080/t FOB last June to $620-650/t FOB, and similarly steep drops were observed in the API Group I segment.

The only cut that seemed to have been spared some of the erosion within the Group I category was bright stock, which was said to have fallen around 15 percent during the same period.

While Brent futures seemed to be fluctuating around U.S. $48-50 per barrel this week, both buyers and sellers were hesitant to make decisions as crude prices were still very volatile, following a sustained downward spiral that resulted in a close to 60 percent drop in values over the past seven months.

Economic data showing a slowdown in key markets such as China, together with political tensions surrounding the Middle East, also contributed to a sedated pace in base oil trading.

A few suppliers were heard to be trying to push sales ahead of the start of the Lunar New Year holidays, starting on Feb. 19 in several Asian nations.

Some offers were lowered in order to entice buyers, but consumers remained cautious as it was not yet clear whether crude oil had reached a bottom, or would continue to fall, precipitating further base oil price decreases. Buying and selling ideas stood about $10-20/t apart, sources said.

Aside from the developments on the crude oil side, base oil oversupply and sluggish demand from downstream lubricant segments were still exerting downward pressure on prices.

Even if crude oil futures were to move up, base oil prices would take time to recover, especially given the product glut and producers need to protect or gain market share.

In China, the prospects of additional Group II capacity coming on stream this year from new plants, or the conversion of Group I units, continued to weigh on price ideas. More than 1.5 million metric tons per year of Group II oils were expected to be introduced into the market from a number of plants in China.

However, given the current market situation and environmental issues, some projects may be delayed or never come to fruition, market sources commented.

One of the plants that was expected to start up in the next couple of years was Hainan Handi Sunshine Petrochemicals 1.27 million tons per year Group II/III unit in Hainan province. The company already operates a 300,000 t/y Group II base oil unit at the same location. The current status of the new Hainan Handi plant could not be ascertained, but the producer had to delay plans to expand its refinery due to disputes with local communities.

The inception of added production into the Asian supply system from the 650,000 t/y Group II Hyundai Oil Bank-Shell plant in Daesan, South Korea, in July last year, and the upcoming start-up of ExxonMobils expansion in Singapore was seen as another factor impacting prices in China, as a large portion of output from these units is intended for the Chinese market, sources said.

There was no official communication regarding the start-up date or specific capacity of the ExxonMobil plant, but analysts expected approximately 400,000 tons of extra product to enter the market in early March. Market talk suggested that test runs may have started in January.

In Southeast Asia, it was heard that Indonesias state-owned oil producer Pertamina issued a tender for 4,000 tons of Group I oils on Jan. 20, with approximately 2,000 tons consisting of light vis cuts and the remainder 2,000 of bright stock. Details about the results were not forthcoming.

Pertamina was also heard to have issued a purchase tender on Jan. 22 for an undisclosed amount of crude oil through its Integrated Supply Chain (ISC) unit to meet its refinery processing needs in April 2015, according to the local press.

Import tenders for Pertamina used to be handled by Pertamina Energy Trading Limited (Petral), but the Oil and Gas Management Reform division of the Energy and Mineral Resources Ministry recommended this year that Pertamina ISC take over the crude oil and fuels import tendering process to increase transparency.

There were few changes noted in Asian base oil pricing this week, following several weeks of sharp drops. Discussions were fairly thin, and the conclusion of deals remained elusive.

On an ex-tank Singapore basis, Group I solvent neutral 150 prices were assessed at $740-$770/t, and SN500 at $730-$770/t. Bright stock was hovering at $1,090-$1,110/t.

On an FOB Asia basis, Group I SN150 was holding at $580-$620/t FOB, while SN500 was heard at $570-$610/t FOB. Bright stock prices were assessed at $1,000-$1,030/t FOB.

Within the Group II segment, prices were steady at $600-$640/t FOB Asia for 150N, and at $620-$650/t FOB Asia for 500N.

Group III prices showed little variation from last week, with the 4 centiStoke and 6 cSt oils at $980-$1,000/t FOB Asia and the 8 cSt grade at $880-$900/t FOB Asia.

In the shipping segment, a number of inquiries popped up this week, mostly involving base oil shipments from South Korea to several ports in Asia. A 1,500-metric ton cargo was expected to be shipped from Onsan to Yokohama, Japan, for Feb. 15-22 lifting. A 2,000-ton parcel was being discussed for Onsan to Jingzhou, for Feb. 21-25 shipment. A 2,000-2,500-ton lot of two grades was on the table for Yeosu to Merak, Indonesia, for Feb. 22-26 lifting. A 2,500-ton cargo was likely to be shipped from Yeosu to Zhenjiang, China, between Feb. 1-12. A 500-ton parcel was being worked on from Yeosu to Taichung, Taiwan, for Feb. 15-20 shipment. Lastly, a 1,000-ton cargo of two grades was on the table for Yeosu to Ho Chi Minh, Vietnam, for Feb. 20-28 shipment.

Upstream, March ICE Brent Singapore futures were trading at U.S. $51.71 per barrel in afternoon trading on Feb. 2, compared to $48.02 per barrel on Jan. 26.