Asia Base Oil Price Report


Base oil participants in Asia are expecting the market to end the year without major turbulence, as a certain degree of price stability prevails and producers appear eager to maintain current levels.

Weakening demand continued to be a large obstacle to steady spot pricing, as buyers have embarked on efforts to work down inventories and finish the year with minimum stocks.

As a result, spot buying interest remained lackluster and this has been pressuring prices down.

Despite a desire to hold on to stable price indications, some suppliers have granted discounts in order to move product ahead of Dec. 31, although this situation seemed to apply only to those grades that were more readily available, such as certain light-viscosity cuts.

On the other hand, rising crude oil numbers offered support to base stocks, with suppliers pointing out that margins were being squeezed and that there was no room for base oil prices to move south.

If crude oil had continued to edge up, there was a possibility that producers would try to hike base oil values before the year was over, but no upward movements were reported this week.

Crude oil futures firmed on expectations that OPEC members would agree to a production cap during a technical committee meeting taking place in Vienna on Nov. 30. However, some analysts doubted that the cut – which was proposed at between 4 percent and 4.5 percent – would be large enough to have a significant impact on the global supply glut.

Prices were also supported by a U.S. Energy Information Administration report that showed the countrys crude stocks unexpectedly fell by 1.3 million barrels last week.

Meanwhile, ICE Brent Singapore January 2017 futures were trading at U.S. $46.50 per barrel on Nov. 28, compared to $47.63/bbl on Nov. 21.

API Group I suppliers were determined to keep prices from sliding, and bright stock, which had weakened in October given reduced demand during the winter months, was heard to have experienced little erosion over the last couple of weeks despite adequate availability.

It also seemed apparent that pricing trends were slightly different in Northeast Asia versus Southeast Asia, as supply levels were said to be slightly tighter in the Southeast on the back of more limited import volumes in recent weeks, together with a regional producers upcoming turnaround.

Just like their counterparts in China – who have cut back on imports to avoid product overhang at the end of the year – Southeast Asian buyers have also been monitoring import activity carefully.

A weaker exchange rate of many local currencies also placed a damper on buying appetite for imports priced in U.S. dollars.

In Thailand, producer IRPC was preparing to take its 326,000 metric tons per year Group I plant in Rayong off-line in February for a scheduled turnaround, and was heard to be preparing inventories to cover requirements during the outage.

In terms of Group II price indications, spot offers were largely unchanged from a week ago, with some sellers reporting sold-out positions for December shipments of a number of cuts.

Sources suggested that base oil production rates of Group II plants have been scaled back in recent weeks, and this has resulted in more limited availability of these grades.

Additionally, Group II demand continues to show steady growth in countries such as China, where Group I still holds a place of prominence due to the gradual implementation of stricter emission rules for the automotive industry and the need to use high quality base stock for lube blending.

Within the Group III segment, there was little price fluctuation noted, although there continued to be downward pressure due to offers of competitively-priced Middle East products.

Base oil price assessments were largely flat week-on-week, with discussions described as subdued.

On an ex-tank Singapore basis, API Group I solvent neutral 150 was stable at $585/t-$605/t, while the SN500 was assessed at $665/t-$695/t and bright stock at $910/t-$930/t.

The Group II 150 neutral was gauged at $585/t-$605/t, and 500N at $760/t-$780/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $470/t-$490/t, while the SN500 was heard at $560/t-$580/t FOB. Bright stock was also steady at $770/t-$790/t FOB.

Within the Group II category, 150N was assessed at $470/t-$490/t, while 500N/600N was unchanged at $630/t-$650/t, all FOB Asia.

In the Group III segment, the 4 centiStoke and 6 cSt oils were heard at $730/t-$760/t, while the 8 cSt grade was holding at $650/t-$670/t, all FOB Asia.

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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