Asia Base Oil Price Report


The buying enthusiasm observed in March and April has started to fizzle out, giving way to more subdued discussions against stable to firm pricing.

There were no concrete reasons for the slowdown in activity, with participants mentioning a combination of factors such as a lack of readily available cargoes, steep prices, lackluster demand from some downstream segments, and the wrap-up of a busy spring production cycle.

In India, a scarcity of offers for Iranian product and the approach of the monsoon season – which is traditionally expected to start in June – were mentioned as additional elements affecting base oil demand.

There has been a steady increase in spot prices since the beginning of the year, with much of the upward climb supported by rising crude oil prices and a very tight supply/demand scenario within the region. However, the pace of the increases seems to have eased.

The snug conditions observed in the Asian base oil market have mostly been the result of recent, ongoing and upcoming plant turnarounds.

In South Korea, a producer was expected to restart its facilities last week, while another supplier was getting ready to shut down its plant next month.

GS Caltex was anticipated to resume operations at its plant in Yeosu last week, but no confirmation was forthcoming regarding whether the unit had been restarted. GS Caltex shut down its plant in March for a turnaround that lasted slightly over a month. The plant has capacity to produce 1,151,000 metric tons per year of API Group II base oils and 146,000 t/y of Group III oils, according toLubesnGreasesGuide to Global Base Oil Refining.

On the other hand, South Korean producer SK Lubricants will be starting a three-week turnaround at its Group II/III plant in Ulsan in early June. The unit has capacity of 701,000 t/y Group II and 1.3 million t/y Group III base oils.

In China, Sinopec was also expected to restart its base oils plant in Ji’nan at the end of April. The producer’s 51,000 t/y Group I and 150,000 t/y Group II base oil plant was shut down in mid-February for a maintenance program.

Additionally, Sinopec Maoming was heard to be planning to restart its 403,000 t/y Group I/II base oils unit in Maoming this month after completion of routine maintenance. No producer confirmation about the restart of these plants could be obtained.

Demand for base stock imports in China has declined because importers and end-users seem to be holding ample inventories, plus a few import cargoes were due to reach Chinese ports during the month of May.

Buying interest from the downstream finished lubricant segment in China has been inconstant, with some consumers securing larger quantities earlier in the year and turning more conservative in recent weeks. Weaker than expected manufacturing activity in China was partly thought to be affecting base oil demand from the lubricants market.

In India, requirements have also been somewhat varied, with discussions appearing to be dwindling as the monsoon season looms just around the corner. While manufacturing plants attempt to continue producing at a steady pace despite the heavy rains, the logistics and transportation often see disruptions.

Another element that has contributed to the more muted activity in India is the lack of Group I offers from Iran, although it was difficult to determine whether this was due to a lack of product at origin. The start of Ramadan at the end of May was also expected to place a damper on trading.

Indian base oil prices were said to be mostly stable, with the Group I solvent neutral 150 mentioned at around U.S. $600/t-$620/t CFR India, and talk about the SN500 centering on $700/t-$720/t CFR India. Bright stock discussions were heard near $780/t-$800/t CFR India.

Meanwhile, trading in other parts of Asia was also subdued, with spot indications assessed mixed from a week ago. Some discussions were taking place at higher numbers compared to the previous week due to a lack of availability of certain base oil grades, while bright stock continued on a downward trek.

On an ex-tank Singapore basis, for example, the Group I solvent neutral 150 was assessed up by $10/t at $700/t-$720/t. SN500 was also higher at $840/t-$860/t, reflecting a $20/t mark-up. Bright stock was assessed unchanged at $960/t-$980/t ex-tank Singapore, following a downward adjustment last week.

Group II 150 neutral was up by $10/t-$20/t at $710/t-$730/t ex-tank Singapore, and the 500N was adjusted up by $40/t to $910/t-$930/t ex-tank Singapore to better reflect current market indications.

On an FOB Asia basis, Group I SN150 was steady at $570/t-$590/t, and the SN500 was unchanged at $770/t-$790/t FOB, but bright stock moved down by $40/t to $810/t-$830/t FOB.

Group II base oils were steady at $630/t-$650/t FOB Asia for the 150N and at $830/t-$850/t FOB Asia for the 500N/600N.

In the Group III segment, the 4 centiStoke and 6 cSt oils edged up by $30/t to $770/t-$790/t, and the 8 cSt to $740/t-$760/t, all FOB Asia.

Upstream, crude oil futures fell more than 1 percent on Monday on the back of increasing output in Libya and high drilling rates in the U.S., which could contribute to a global oil supply glut, particularly as there are signs that demand may be slowing down.

ICE Brent Singapore July futures settled at $51.74 per barrel on May 1, compared to $52.41/bbl for June futures on April 24.

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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