Asia Base Oil Price Report


Prices in Asia were mostly flat as participants awaited signs from the feedstock side to determine whether values should be going up or down, while the Mid-Autumn festival celebrated in China resulted in a slowdown of trading activity.

With crude oil prices rising one day and falling the next, it has been difficult to predict where base oil prices may be heading, and this has affected the number of spot transactions being concluded.

Oil futures settled at a nearly two-week low during the week, on ongoing concerns over a global glut that was likely to last longer than originally expected. The concerns were fueled by a report published this week by the International Energy Agency which reduced its crude demand forecast and predicted that supply would continue to outpace requirements well into 2017.

Participants were hoping that market direction would be gleaned after an international energy meeting in Algiers on Sep. 26-28, where OPEC members were anticipated to discuss a potential output freeze to help stabilize oil prices.

ICE Brent Singapore November futures were trading at U.S. $45.67 per barrel in afternoon sessions on September 20, compared to $47.47 per bbl on Sept. 12.

At the same time, with the start of the fall season, base oil requirements from downstream finished lubricant markets were expected to weaken, with signs of a slowdown already becoming evident in certain segments.

Base oil buyers were therefore reluctant to commit to large volumes for fear of being caught with pricey inventories at a time when values could be going down.

In the API Group III segment in particular, downward pressure has begun to erode values, as existing Northeast Asian players are trying to protect their market share against relative newcomers from the Middle East.

The most obvious target for new Middle East production is India due to its proximity, and indeed it was heard that some cargoes had been shipped from the new Abu Dhabi National Oil Co. (Adnoc) plant in Ruwais, United Arab Emirates.

The Adnoc plant can produce 100,000 metric tons per year of Group II and 500,000 t/y Group III base oils. The unit started production in late May, with some shipments heard to have been completed to India in July. However, it could not be ascertained whether production has reached normal rates yet.

There is talk that the producer will also be targeting other markets in Asia, but conquering some sectors may take longer than expected due to the current lack of approvals for motor oil and other applications, although these base stocks can be used in other products such as process oils, sources explained.

Another new plant, Luberef’s facility at Yanbual Bahr, Saudi Arabia, will bring 700,000 t/y of Group II oils to the market as well, likely towards the end of the year.

Group II oils spot prices had moved up ahead and during Formosa Petrochemical’s two-month turnaround at its Mailiao plant – which began in June – but the trend was reversed once the producer restarted production.

In fact, Formosa lowered its domestic list prices for September shipments of Group II 500N grade last week. Buying interest in Taiwan was said to be moderate, and local supply was expected to be sufficient to cover requirements.

With activity generally deemed subdued in Asia, spot prices did not undergo significant fluctuations and remained largely unchanged week on week, with the exception of a few assessments that experienced small downward adjustments to reflect market discussions.

On an ex-tank Singapore basis, the Group I SN150 cut was slightly down by $5/t at $585/t-$605/t, while the SN500 was also assessed down by $5/t at $665/t-$695/t. Bright stock was unchanged at $930/t-$950/t.

The Group II 150N was also down by $5/t at $585/t-$605/t, and the 500N was similarly down by $5/t at $765/t-$785/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was heard at $480/t-$500/t, and the SN500 was steady at $590/t-$610/t FOB. Prices for bright stock were holding at $790/t-$810/t FOB.

In the Group II category, the 150N cut was holding at $530/t-$550/t FOB Asia, while the 500N/600N was heard at $680/t-$700/t FOB Asia.

Within the Group III tier, the 4 centiStoke and 6 cSt oils were unchanged at $810/t-$840/t FOB Asia, while the 8 cSt grade was hovering at $650/t-$670/t FOB Asia, following downward adjustments of $10/t last week.

In other news, ports in Taiwan and central China had to brace for possible disruptions caused by super typhoon Meranti, which struck China after pounding Taiwan on Sep. 15. Some petrochemical plants in Taiwan suspended production as a precautionary measure, while others had to halt production due to power supply outages.

Gabriela Wheeler can be reached directly at

LNG Publishing shall not be liable for commercial decisions based on the contents of this report.

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