Asia Base Oil Price Report


Asias base oil market is striving to find footing as uncertainties regarding crude oil and feedstock prices linger and requirements take longer than expected to pick up.

Suppliers anticipated an uptick in base oil demand following the Lunar New Year holiday, and while there has been increased buying interest, buyers are still hesitant about acquiring large quantities, as price direction is not clear.

Nevertheless, depleted inventories and reduced import volumes in recent months in countries such as China are resulting in a higher number of inquiries.

A slight tightening of a number of grades is offering support to stabilizing price indications, especially for the API Group II oils. This is partly attributed to lower running rates at base oils facilities, sources speculated.

While producers prefer not to reveal their plants’ operating rates, the overall market situation of lackluster demand and falling prices has likely driven suppliers to run plants at reduced rates over the last few months, sources explained.

As a result, March spot availability was expected to be slightly reduced against a backdrop of heightened buying appetite as the spring production season gets underway.

At the same time, a few plants may be coming back on-stream after being shut down for maintenance.

In China, Sinopec was expected to restart its Group II base oils line at Jingmen, Hubei province, in March. The facility can produce 200,000 tons per year of Group I base oils and 100,000 t/y of Group II cuts, and was shut down in late December, with the Group I unit having restarted in January. The base oil plant was heard to have been shut down during a turnaround at Sinopec’s Jingmen crude refinery.

In India, buying interest has been subdued because participants prefer to hold lean inventories as the end of the fiscal year on March 31 approaches.

According to sources, little Group II product of U.S. origin is currently making its way to India, compared to a few months ago when large quantities were imported, as prices in Asia have fallen considerably, while local and regional cargoes are offered at very competitive prices.

Additionally, the rupee lost ground against the dollar and imports are therefore considered less attractive.

There appear to be a number of spot cargoes involving Group I SN150 and SN500/600 that will be shipped from Iran to India, but low bids have placed some pressure on price expectations, as there is also plentiful availability of Group II oils from Indian producers. These products compete directly with Group I cuts used for certain downstream applications as consumers prefer the higher-performance oils if they can be obtained at similar price levels.

While negotiations between Asian buyers and sellers involving March spot shipments have started, suppliers do not appear in a hurry to place cargoes as they expect the market to tighten in coming weeks, possibly helping prices recover.

Price assessments were generally steady from a week ago, although the range for the Group II 500 neutral ex-tank Singapore was revised down to bring it more in line with current market indications.

On an ex-tank Singapore basis, the Group I solvent neutral 150 was unchanged at $520/t-$540/t ex-tank Singapore, the SN500 cut was assessed at $570/t-$590/t, and bright stock remained at $990/t-$1,010/t.

The Group II 150N cut was holding at $490/t-$510/t ex-tank Singapore, while the 500N was down $30/t at $590/t-$610/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed at $410/t-$430/t, while SN500 was steady at $420/t-$440/t FOB. Bright stock prices were hovering at $860/t-$880/t FOB.

In the Group II category, the 150N cut was steady at $400/t-$430/t FOB Asia, while the 500N was assessed at $510/t-$530/t FOB Asia.

Group III grades underwent no revisions week on week, with 4 centiStoke and 6 cSt oils gauged at $850/t-$880/t FOB Asia, and the 8 cSt grade at $600/t-$620/t FOB Asia.

Most Asian market players continued to worry about the erratic behavior of crude oil prices seen of late, although this week, values did not show very sharp fluctuations.

Crude oil futures remained under pressure, though, as data showed U.S. crude inventories had risen, underscoring concerns over the global supply glut that is not expected to abate any time soon. According to Bank of America Merrill Lynch, global petroleum stocks have increased by 800 million barrels since the beginning of 2014. The oversupply against tepid demand has caused oil prices to drop around 70 percent since the summer of 2014, analysts noted, and the situation is not likely to change unless producers agree to cut output.

ICE Brent Singapore futures were trading at $33.68 per barrel in afternoon sessions on Feb. 25, compared to $33.70 per bbl on Feb. 22.

Very few fresh inquiries emerged on the shipping front during the week. A 2,000-metric ton lot was discussed for Daesan, South Korea, to Nantong, China, for late Feb/early March shipment. A 3,000-ton parcel was on the table for Yokkaichi, Japan, to Tianjin, China, for end Feb.-Mar. 5 loading.

Gabriela Wheeler can be reached directly at

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

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