Asia Base Oil Price Report


The downward trend for API Group I and II in Asia began to stall on the back of rising crude oil values and snug supply, while Group III oils remained under pressure.

Price decreases observed over the last several weeks appear to have stalled as crude oil prices jumped 4 percent on Thursday – with Brent crude at its highest in about 16 months – after OPEC members and Russia agreed to curb output to help reduce the global oversupply.

ICE Brent Singapore February 2017 futures were trading at U.S. $54.68 per barrel on Dec. 5, compared to $46.50/bbl for January futures on Nov. 28.

Base oil suppliers were heard to have paused December and January shipment negotiations in order to evaluate market conditions, and some were heard to be considering upward price adjustments given the surge in crude values.

On the local level, Taiwanese producer Formosa Petrochemical (FPCC) was heard to have initiated an increase for its December list prices of Group II oils on firming feedstock costs, although other fundamentals such as demand were said to have remained largely unchanged from last month.

FPCC was understood to have lifted its list price for the 70 neutral grade by 30 cents per liter, New Taiwan dollar; its 150N oil by a smaller amount of NT$ 10 cents/l; and its 500N cut by NT$ 24 cents/l. This follows several months of consecutive downward price adjustments.

Meanwhile, there was increased talk that Northeast Asian producers would be hiking spot export prices of the Group II heavy-viscosity oils due to firmer raw material costs and tightening supply.

The snug supply conditions were said to have been brought on by lower operating rates at some facilities in Asia and a pick-up in demand as buyers were hoping to beat potential price hikes.

It was also heard that South Korean producer S-Oil had completed a routine turnaround at its Onsan Group II/III base oil facility, but that the shutdown had only had a minor impact on availability as regional demand has declined over the last few weeks. The producer had also built inventories to cover commitments during the outage, sources said.

In China, activity was fairly thin due to the approach of the end of the year, when buyers prefer to operate with minimum inventories. Suppliers stocks were deemed sufficient to cover current demand, with import volumes said to have been flat compared to the previous month.

Industry experts speaking at the ICIS Pan American Base Oils conference in Jersey City, New Jersey, in the U.S., on Dec. 1-2 said that within Asia, China would be the country showing the most Group II and naphthenic oils capacity growth in the next five years.

At the same time, there is a growing deficit of heavy-viscosity base oils such as bright stock projected into 2025, and the premium between the cost of these cuts versus the lighter grades continues to widen.

The new China National Offshore Oil Company (CNOOC) plant in Taizhou, Jiangsu province was expected to start manufacturing base oils by the end of the year. However, the plant has not yet been able to achieve on-spec production, an ICIS source told Lube Report Asia on the sidelines of the conference, adding that the producer is not expected to start commercializing product until early next year. The plant is expected to have a capacity of 400,000 tons per year of Group II oils and 200,000 t/y of naphthenic base stocks.

This week, base oil price assessments were largely unchanged as participants continued to monitor crude oil price movements and market conditions.

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

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

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

Within the Group II category, 150N was assessed at $470/t-$490/t, while 500N/600N was holding 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, but these cuts continued to be exposed to downward pressure given plentiful availability and the arrival of a new player in the Middle East.

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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