Asia Base Oil Price Report


Base oil prices were mixed in Asia, as some export spot values fell, some were left unchanged, and at least one local producer imposed domestic markups.

It was heard that Taiwanese API Group II producer Formosa Petrochemical lowered its March list price for the 150 neutral grade by 0.11 New Taiwan dollar per liter. At the same time, the producer was understood to have increased its Group II 500N grade by NT$0.28/l for all domestic March transactions.

The steeper indications for the high-viscosity grade were thought to be driven by tightening supply and expectations of increased demand for the heavier grades during the spring and summer seasons. Blenders typically use the heavier cuts in their formulations during warmer weather, and the heavy-vis oils see heightened demand during this time of year.

Additionally, it was heard that some base oil producers have been running plants at reduced operating rates over the last few months given weak prices and lackluster demand, leading to a tightening of certain grades.

In coming weeks, buying appetite is anticipated to improve in countries such as China, as activity in downstream lubricant segments intensifies. A number of Chinese base oil facilities are being brought back on stream on heightened demand expectations, following prolonged shutdowns prompted by weak market conditions.

Sinopec Nanjing was anticipated to resume production at its new 150,000 metric-ton per year Group II base oil facility in Nanjing, Jiangsu province, sometime in March. The plant started test runs last October, but was taken offline in November and had not been restarted since.

Sinopec was also heard to be planning to restart its Group II base oils line at Jingmen, Hubei province, this month. The facility has capacity to produce 200,000 t/y of Group I base oils and 100,000 t/y of Group II cuts. It was shut down in late December, with the Group I unit having restarted in January.

In India, base oil demand has been tepid because consumers prefer to finish the fiscal year on March 31 with low inventories, but requirements are likely to build up in April as buyers return to replenish stocks.

As a result of weak buying interest currently seen in India, base oil availability is said to be plentiful. Offers for Iranian Group I base oils were heard to have been reduced by about U.S. $10-$20 per metric ton to compete with prices from local suppliers. Prices for Iranian solvent neutral 150 were heard at around $380-$400/t FOB Iran, while SN500 was hovering at $390-$410/t FOB.

Asian suppliers appear concerned that additional Iranian base oil might be moving to the region, once all pertinent sanctions have been lifted and the country starts producing more crude oil.

Indeed, Iran’s export of base oils and by-products to South Asia and China could increase by 10 to 15 percent, while exports to India may increase approximately 30 percent, Majid Safdari, chairman of Vista Energie-Tehran, said at a recent industry event in London.

However, Iran is currently producing only Group I oils, as there has been a lack of investment in the country to develop Group II and III refineries.

While Iran is expected to export large quantities of base oils, domestic demand from the lubricants segment is also predicted to grow as there will be renewed development within the automotive industry. “This segment has the most potential – after crude oil – to benefit from post-sanction opportunities,” Safdari noted.

More joint ventures of local Iranian automakers with European, Japanese, and American car manufacturers are expected to be established in the next few years. This will lead to an increase in sales of new car models, which will also create the need for higher performance base oils and lubricants in Iran.

Given the predominance of Group I production and the lack of Group II and III facilities, there will be a call for new plant development, with the Bandar Abbas refinery showing the most potential to house a grassroots Group II or III unit, Safdari noted.

Negotiations for March base oil shipments are underway throughout Asia, and are expected to pick up in the next few days, sources said. Renewed buying interest and higher crude oil values might help stabilize base stock prices, while suppliers hope to have an opportunity to increase offers and improve margins, which have been squeezed over the last several months.

Spot price assessments were stable-to-soft week on week, with a small downward adjustment perceived on some of the light-vis grades on the back of lower bids and offers.

On an ex-tank Singapore basis, the Group I SN150 was slightly lower by $10/t at $510/t-$530/t ex-tank Singapore, the SN500 cut was steady at $570/t-$590/t, and bright stock was also unchanged at $990/t-$1,010/t.

The Group II 150N cut was steady at $490/t-$510/t ex-tank Singapore, while the 500N was also unchanged at $590/t-$610/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed at $400/t-$430/t, down by $10/t at the low end of the range, while SN500 was steady at $420/t-$440/t FOB. Bright stock prices were holding at $860/t-$880/t FOB.

In the Group II category, the 150N cut was holding at $400/t-$430/t FOB Asia, while the 500N was assessed at $510/t-$530/t FOB Asia.

In the Group III tier, prices were largely steady, with 4 centiStoke and 6 cSt oils heard at $850/t-$880/t FOB Asia, and the 8 cSt grade hovering at $600/t-$620/t FOB Asia.

Upstream, crude oil futures rose on signs that U.S. oil production continued to decline, although new inventory data showed that crude stocks were at record levels.

Brent climbed 35 percent from a 12-year low of $27.10 registered on Jan. 20, feeding expectations that prices may have bottomed.

ICE Brent Singapore futures were trading at $39.06 per barrel in afternoon sessions on March 7, compared to $33.68 per bbl. on Feb. 25.

Gabriela Wheeler can be reached directly at

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

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