Asia Base Oil Price Report


Base oil prices in Asia continued to be exposed to downward pressure as evidenced by lower spot discussions and declining list prices on a local level, although Japan appears to be an exception.

While a number of Asian suppliers have adjusted domestic base oil prices down, Japanese refiner JX Nippon Oil was heard to have announced an increase for the first time this year.

Price movements in Japan sometimes lag those in other countries in the region because they are calculated based on a formula that includes crude oil prices on a CIF basis and implemented the following quarter.

Higher crude in previous months was pushing base oil prices up for the October-December timeframe, sources explained.

One buyer said that JX Nippon’s API Group I solvent neutral 150 would be increasing by Yen 9.2 per liter from its third quarter price to Yen 66.16/liter.

The other two Japanese producers, Idemitsu and Cosmo Oil, were expected to follow suit with increases of their own, according to sources.

Finished lubricant demand in Japan was described as largely flat to slightly down compared to a year ago, but this was partly expected due to a steady contraction in the domestic consumption over the last couple of years.

It was also heard that JX Nippon was planning to shut down its Negishi, Japan, refinery for maintenance during the last quarter of the year, but further details remained elusive. The refinery houses a 229,000 metric tons per year Group I base oil plant, according to LubesnGreases Guide to Global Base Oil Refining.

The opposite price trend was observed in Taiwan, where Group II producer Formosa Petrochemical was heard to have lowered its domestic list prices–its second downward adjustment in a matter of weeks.

News emerged that Formosa had decreased the price of its Group II 150 neutral by New Taiwan Dollars 0.28 per liter. The decrease went into effect on Sep. 16, but it took a few days for details to surface because of the Mid-Autumn festival celebrated in Taiwan and China during the week.

Only two weeks earlier, at the beginning of the month, Formosa had cut its 150N list prices by NT$1.41/liter.

Additionally, Formosa also revised down list prices for its 500N grade by NT$ 0.76/liter on Sep. 16, having already lowered its 500N prices by NT $1.68/liter on Sep. 1.

There was no confirmation as to the reason for the decreases, but sources surmised that the movements were meant to protect market share given improved Group II supply in the region and competitive pricing.

Aside from Formosa’s Group II plant resuming production–following a two-month turnaround–a new plant in China was anticipated to bring additional Group II capacity to the market this month.

China National Offshore Oil Co. was slated to start production at its new 400,000 t/y Group II base oil plant in Taizhou, Jiangsu province, some time in September, although it could not be ascertained when commercial product would be available. The plant has capacity to produce around 200,000 t/y of naphthenic stocks as well.

Demand in China has softened and Chinese importers appear to be reluctant to place orders for overseas spot cargoes because of weak downstream domesticdemandthis month ahead of the National Day Golden Week holidays celebrated the first week of October.

Buyers have secured product to run day-to-day operations, but prefer not to carry high inventories in case base oil prices fall in the next few weeks.

However, once manufacturers return to production following the holidays, output rates are expected to be cranked up and there will likely be a pick-up in demand, sources said.

Base oil price discussions in Asia were characterized as guarded this week, with some spot numbers moving down and others remaining unchanged week on week. Some prices were notionally adjusted down to reflect the downward market trend and current discussions.

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

The Group II 150N was steady at $585/t-$605/t, and the 500N was holding at $765/t-$785/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed down by $10/t at $470/t-$490/t, and the SN500 was also down by $10/t at $580/t-$600/t FOB. Prices for bright stock were also adjusted down by $10/t at $780/t-$800/t FOB.

In the Group II category, the 150N cut was holding at $530/t-$550/t FOB Asia, while the 500N/600N was down by $10/t at $670/t-$690/t FOB Asia.

Within the Group III tier, the 4 centiStoke and 6 cSt oils were also revised down by $10/t at $800/t-$830/t FOB Asia, with the 8 cSt grade also edging down by $10/t to $640/t-$660/t FOB Asia.

Meanwhile, on the crude oil front, values rose during the week after touching six-week lows, as a weaker dollar and an unexpected large drop in U.S. crude inventories served as encouragement to investors ahead of next week’s meeting between OPEC members and Russia to discuss a possible supply curb.

ICE Brent Singapore November futures were trading at U.S. $46.78 per barrel in early sessions on September 27, compared to $45.67 per bbl on Sept. 20.

In other news, China is expected to implement new emission standards for vehicles and lower the sulfur content of gasoline, starting in 2017, in an effort to reduce air pollution from passenger cars and trucks.

The standards will be implemented according to a nationwide schedule in six different stages referred to as China 1-6. Emission standards for new passenger cars and light-duty commercial vehicles up to the proposed China 6 level are mostly based on EU regulations.

Gabriela Wheeler can be reached directly at

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

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