Asia Base Oil Price Report


Developments on the crude oil front continued to mark the pace for Asian base oil trading. The recent crude price swings kept base oil buyers away while base oil prices remained on precarious ground.

Firmer crude and feedstock prices were expected to lend a stabilizing effect to base oils, but participants said it would take some time before the higher crude values were translated into steeper base oil numbers.

In the meantime, crude oil values remained volatile, and it was not clear whether the upward price trend would be sustained.

Aside from upstream price fluctuations, the current oversupply and sluggish demand conditions plaguing the base oil segment resulted in further downward price adjustments by major Asian suppliers. In Southeast Asia, a refiner was heard to have revised some of its API Group I base oil prices for the 11th time since September of last year – a clear indication of how often prices have been revised over the past six months. This time, the producer reduced prices of bright stock exported to China by U.S. $50 per metric ton, leaving the values of its solvent neutral 150 and SN500 intact, according to sources.

Similarly, prices of bright stock sold into Singapore were moved down by $50/t, but SN150 and SN500 were also adjusted in this case, dropping $60/t, with an effective date of Feb. 4.

In Taiwan, another supplier was understood to have lowered its domestic list prices for February shipments. Sources said Formosa Petrochemical Corp. would be marking down its Group II 70 neutral, 150N and 500N oils, which are priced in New Taiwan Dollars, by an equivalent of approximately $55-70/t U.S. dollars.

The Taiwanese producer has also been adjusting list prices at least on a monthly basis – sometimes even twice a month – to keep up with sliding crude oil values and to offer an attractive alternative to imports. A majority of Taiwanese base oil consumers prefer to purchase product from local manufacturers to avoid logistical complications, as long as prices are deemed competitive.

Sources said demand in Taiwan was lackluster because requirements from downstream lubricant segments have shown little improvement in recent months, and this condition was exacerbated by the approach of the Lunar New Year holidays starting Feb. 19.

A similar situation was seen in China, where activity has started to slowly wind down ahead of the traditional two-week holiday. Local base oil producers have been running plants below capacity to avoid inventory build-ups, especially since many finished lubricant plants either reduce output or shut down temporarily during the holidays. It was heard that Sinopec was planning to cut Group I and II production between 5 and 10 percent in February, as compared to January, and other producers in the region were mulling a similar strategy.

Base oil imports were also anticipated to be reduced during the month due to the slowdown in demand, with Formosa Petrochemical expected to ship substantially less volume to China in February, and the number of cargoes from Southeast Asia also expected to dip.

As a result of ongoing price revisions by suppliers and the prevailing downward pressure caused by a supply/demand imbalance, some price assessments have been adjusted down this week.

On an ex-tank Singapore basis, Group I solvent neutral 150 prices were assessed down by $30/t at $710-$740/t, and SN500 at $700-$740/t. Bright stock was also gauged down by $30/t at $1,060-$1,080/t.

On an FOB Asia basis, Group I SN150 was down $20/t at $560-$600/t FOB, while SN500 was also adjusted down $20/t at $550-$590/t FOB. Bright stock prices were assessed down by $20/t at $980-$1,010/t FOB.

Within the Group II segment, prices were also lower by $20 at $580-$620/t FOB Asia for 150N, and at $600-$630/t FOB Asia for 500N.

Group III prices were assessed unchanged as very little trading was reported, with the 4 centiStoke and 6 cSt oils steady at $980-$1,000/t FOB Asia and the 8 cSt grade at $880-$900/t FOB Asia.

In the shipping arena, discussions centered mostly on cargoes expected to be moved from South Korea. A 2,500-ton parcel of three base oil grades was quoted from Yeosu to Merak, Indonesia, for Feb. 20-27 shipment. A 1,000-ton lot of two grades was on the table for Yeosu to Ho Chi Minh, Vietnam, for Feb. 20-28 lifting. There was a similar cargo involving 3,000 tons from Yeosu to Ho Chi Minh and Merak for Feb. 20-27 shipment. A 500-ton cargo was being worked on for Yeosu to Taichung, Taiwan, for Feb. 15-22 dates. A 1,740-ton lot of three grades was quoted for Yeosu or Ulsan to Cartagena, Colombia, for Feb. 6-26 lifting. A 3,000-ton parcel was expected to be shipped from Daesan to Tianjin, China, on March 1-5.

Lastly, a 10,000-ton cargo was being discussed for shipment from the West Mediterranean to the United Arab Emirates and South Korea on Feb. dates.

Upstream, March ICE Brent Singapore futures were trading at U.S. $57.68 per barrel in afternoon trading on Feb. 9, compared to $51.71 per barrel on Feb. 2.

Related Topics

Base Oil Pricing Report    Base Stocks    Other