Asia Base Oil Price Report


There was a sense of guarded optimism among Asian base oil suppliers as prices have either stabilized or inched up slightly, while supply appears to be more balanced against current demand.

Following almost nine months of continuous downward price adjustments, a majority of base oils were said to be stable, with some pockets of the market showing a firming edge.

The rebound in crude oil prices and a tightening of availability in the region are allowing sellers to keep offers largely unchanged from the previous week.

Prices are being propped up by snug supply of several grades, within the API Group II segment in particular, on the back of recent and upcoming turnarounds.

Several plants had been taken off-line in China during the last quarter of 2015 and the first quarter due to weak market economics. However, since fundamentals appear to be improving, a couple of plants were heard to have been restarted, including the Sinopec Group II unit in Jingmen and the new Sinopec facility in Nanjing.

In Taiwan, sources indicated that Formosa Petrochemical is planning to shut down its 600,000 metric ton per year plant in Mailiao for routine maintenance in June. The turnaround is expected to start on June 20 and last two months.

Formosa was heard to be running the plant at full rates and preparing inventories to cover contractual obligations during the turnaround. The producer has started to curb its offers of spot export cargoes and to control the volumes sold into the domestic market as of this month, sources said.

Formosa decreased its March list price for the 150 neutral grade, but increased its Group II 500N grade for all domestic March transactions.

As the domestic supply is getting tighter and crude oil prices have moved up, there has been increased buying interest from local consumers in Taiwan to secure additional quantities, which might exacerbate the snug supply situation.

However, the Taiwanese economy is still facing uncertainties and the different downstream lubricant segments are not showing much improvement, so participants will have to wait and see how things play out, sources noted.

A similar situation was seen in China, where demand has started to pick up because of depleted inventories following the extended Lunar New Year holiday, but players were not entirely confident that downstream conditions would be supportive of higher base oil prices, as demand for finished lubricants is still lackluster.

As a result of the tightening market conditions and steeper crude values, Northeast Asian suppliers have increased their offers of the heavy-viscosity Group II cut by between $5 per metric ton and $10/t, although buyers are still reluctant to pay the higher prices. Offers for the 500N oil were heard to be hovering at around $530/t-$540/t FOB Asia, while bids were closer to $510/t-$520/t FOB.

Within the Group I segment, it was bright stock which commanded the most attention, with requirements experiencing a boost in China and indications moving up by around $10/t week on week.

In Singapore, the supply/demand balance was also heard to be tightening, especially for the Group II 150 neutral and 500N/600N oils, as there appears to be heightened interest given the less abundant availability in Northeast Asia. This gave support to stable ex-tank Singapore spot price indications.

Meanwhile, in the U.S., a couple of producers surprised the market with the first increase in months. Both Chevron and Flint Hills Resources communicated increases for their Group II oils, with Chevron moving prices up 15 cents per gallon to 20 cents/gal., and Flint Hills Resources 15 cents/gal across the board.

Spot prices in Asia were assessed stable to slightly firmer this week on the back of current market fundamentals, as higher bids and offers and fresh spot discussions were heard.

On an ex-tank Singapore basis, the Group I solvent neutral 150 was steady at $510/t-$530/t ex-tank Singapore, the SN500 at $570/t-$590/t, and bright stock was holding 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 unchanged at $590/t-$610/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed at $400/t-$430/t, while SN500 was steady at $420/t-$440/t FOB. Bright stock prices were assessed up by $10/t at $870/t-$890/t FOB.

In the Group II category, the 150N cut was holding at $400/t-$430/t FOB Asia, while the 500N edged up by $5/t to $515/t-$535/t FOB Asia.

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

Upstream, crude oil prices slipped on Thursday after registering the highest levels this year, as hopes for a potential meeting of crude producers to discuss a freeze in output appeared to be dissipating.

Oil prices had climbed to 2016 highs early in the week, when traders shifted their focus from a global supply glut to signs of slowing U.S. shale production.

ICE Brent Singapore May futures were trading at $40.04 per barrel in afternoon sessions on March 14, compared to $39.06 per bbl on March 7.

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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