Spot cargoes of both API Group I and Group II heavy-viscosity grades have not been easy to locate, as suppliers are managing inventories carefully to insure they have enough material to cover contractual obligations before offering extra cargoes for spot transactions.

Some of the regional suppliers have been carrying low inventories since last year because of weak base oil prices. Producers had been keen on optimizing plant running rates because they preferred not to hold high inventories that could rapidly lose their value, as prices were falling almost on a daily basis.

But the tide appears to have turned, and suppliers are now able to raise their spot offer levels, with some grades seeing increases of at least U.S. $20 per metric ton week-on-week, and some hikes of up to $40/t were also reflected in this week’s discussion levels.

Within the Group II segment, spot cargoes of 500/600 neutral are particularly difficult to locate, as availability in Northeast Asia is limited. This is partly due to an upcoming turnaround at Formosa Petrochemical’s Group II plant in Mailiao, Taiwan. Sources indicated that the producer is planning to shut down its 600,000 metric ton per year plant for a two-month turnaround starting June 20.

The producer has shipped fewer volumes in April under contract to China, as it is monitoring its inventory levels to be able to continue supplying customers during the outage -especially on the domestic front. May export shipments are expected to be restricted as well.

In China, a couple of maintenance shutdowns have curtailed availability of Group II base oils as well.

Shandong Hrnd Group was heard to have shut down its 200,000 t/y Group II base oils facility in Shandong province for a 40-day turnaround earlier this month.

Hainan Handi Sunshine Petrochemical also took its 300,000 t/y Group II base oils facility in Hainan province offline for a routine turnaround in mid-April.

Coming up in August, it was heard that Sinopec plans to idle its Nanyang Group I facility in Henan province for a one-month maintenance program. The unit has capacity to produce 47,000 t/y of Group I base oils, according to Lubes’n’Greases‘ Guide to Global Base Oil Refining.

Besides support from the supply/demand perspective, base oil spot prices were also buoyed by firm crude oil values, although prices have remained volatile and short-term trends are difficult to predict.

Many analysts had foreseen a huge drop in oil prices after the April 17 meeting of oil producing countries held in Doha, Qatar, failed to deliver an output freeze.

However, the following day, the start of a workers’ strike in Kuwait made crude oil prices jump by more than 3 percent. The workers’ strike cut oil output to 1.1 million barrels per day from 2.8 million in March, according to media reports.

Oil prices slid later in the week as a rebounding dollar weighed on commodities denominated in the U.S. currency, and reports showed a larger than expected build in U.S. crude inventories.

There was also ongoing concern that this month’s 14 percent oil price rally would encourage U.S. shale crude producers to raise output, adding to the ongoing global supply glut.

ICE Brent Singapore futures closed at $44.67 per barrel in afternoon sessions on April 25, compared to $41.28 per bbl. on April 18.

A majority of base oil spot prices moved up in Asia during the week, given that suppliers raised their offers and buyers adjusted buying ideas in order to secure May cargoes.

On an ex-tank Singapore basis, the Group I solvent neutral 150 cut moved up $10/t to $530/t-$550/t ex-tank Singapore, and the SN500 was adjusted up by $20/t to $600t-$620/t. Bright stock also edged up by $10/t to $1,010/t-$1,030/t ex-tank Singapore.

The Group II 150N cut was heard up by $10/t at $510/t-$530/t ex-tank Singapore, and the 500N was revised up by $20/t at $625/t-$645/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed higher by $20/t at $430/t-$450/t; the SN500 jumped by $40/t at $480/t-$500/t FOB. Bright stock inched up by $10/t at $890/t-$910/t FOB this week.

In the Group II category, the 150N cut was assessed up by $20/t this week at $470/t-$500/t FOB Asia, while the 500/600N moved up by $20/t at $600/t-$630/t FOB Asia.

The 4 centiStoke and 6 cSt oils were largely steady at $850/t-$880/t FOB Asia, and the 8 cSt grade was assessed at $600/t-$620/t FOB Asia on thin trading.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

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