Asia Base Oil Price Report


Prices in Asia are mixed, with some countries seeing stability and others reflecting softer corners because of changes in domestic market conditions.

While base oil availability was generally deemed tight in the region, consumers in a number of countries were said to be well-supplied and in no immediate need of acquiring large volumes.

As a result, demand in countries such as China and Taiwan was said to be slightly down from previous months, which exerted downward pressure on domestic prices.

However, given a number of ongoing and upcoming turnarounds in Asia, some buyers were slowly returning to the market to replenish inventories on concerns that certain grades may be in short supply in coming weeks.

Suppliers were trying to maintain offers at steady levels, asserting that spot supply remained snug in Asia and some grades were still difficult to locate.

Spot shipments to China from South Korean producer GS Caltex were heard to have been temporarily suspended following a turnaround at the company’s Yeosu plant in April. The plant was understood to be gradually ramping up to full production, but this could not be confirmed. The plant’s capacity is 1,151,000 metric tons per year of API Group II and 146,000 t/y of Group III base oils, according to LubesnGreases Global Guide to Base Oil Refining.

Additionally, it was not clear whether spot supply from SK Lubricants unit in Ulsan, South Korea, would be affected by a turnaround scheduled for this month. The plant was anticipated to be shut down for routine maintenance in early June. SKs unit has capacity to produce 700,000 t/y of Group II and 1.3 million t/y of Group III base oils. No further details were forthcoming from the producer at the time of writing.

There were also reports that regular spot shipments from Formosa Petrochemical Corp. (FPCC) in Taiwan would be reduced during June as the producer’s Group II plant had suffered a production setback due to a mechanical problem in an upstream unit.

FPCC was also heard to have lowered its domestic list prices for the month of June. The supplier’s Group II 70N grade would be down by New Taiwan Dollar (NT$) 1.05 per liter, its 150N by NT$1.45/l, and its 500N by NT$0.65/l for June transactions. This is the second consecutive month that prices from the supplier have been reduced.

Ongoing and upcoming plant shutdowns at Sinopec Maoming’s base oil unit and Shandong Hengrundes plant in Shandong were also expected to impact availability in China.

Meanwhile, demand in countries such as India remained strong, despite the onset of the monsoon season. Lubricant demand in India continues to show moderate growth – particularly compared to other nations where base oil demand increases are flat – and several international firms are looking at establishing or expanding operations in the country, sources noted.

Indias base oil imports – both of paraffinic and naphthenic oils – were significantly up in April and May from the same months last year, with parcels from the U.S., South Korea, Taiwan, Iran, United Arab Emirates, Singapore, Spain and Russia making their way into the country.

While current base oil supply in Asia was generally deemed tight, participants expected conditions to change once all plants resumed production and demand started to decline in the fall.

When exactly this market softening would take place was difficult to predict, sources said, but a similar situation seems to present itself every year in the second semester, sources pointed out.

However, some players noted that the turnaround schedule had particularly been busy during the first half of the year, and this could impact product availability moving forward.

Both buyers and sellers were also monitoring crude oil prices closely, as numbers have fluctuated significantly in recent weeks.

Crude oil futures had steadily been losing territory last week, and settled lower on Friday, June 2, following U.S. President Donald Trumps decision to pull out from the Paris Agreement climate pact, as traders saw fewer obstacles preventing drillers from increasing production. The terrorist attack in London on June 3 also affected sentiment.

However, futures climbed on Monday after top crude exporter Saudi Arabia and other Arab nations severed ties with Qatar, driving up prices on concerns over increased tension in the Middle East, Reuters reported.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with top liquefied natural gas and condensate shipper Qatar, accusing it of supporting extremism and undermining regional stability.

Disagreements within the OPEC could potentially impact the existing deal to cut production in order to support global prices.

At the same time, crude output in the United States – which is not participating in the output cuts – has jumped more than 10 percent since mid-2016, to 9.34 million barrels per day because of stronger crude prices, placing downward pressure on global oil values.

ICE Brent Singapore August futures settled at $50.12 per barrel on June 5, down from $51.96/bbl for July futures on May 29.

Meanwhile, base oil spot prices were assessed as stable for the most part in Asia, although a few local indications were softer.

On an ex-tank Singapore basis, Group I SN150 was steady at $700/t-$720/t, SN500 at $860/t-$880/t, and bright stock at $960/t-$980/t.

Group II 150 neutral was also unchanged at $710/t-$730/t, and 500N at $920/t-$940/t, again ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was stable at $570/t-$600/t, and SN500 was hovering at $770/t-$790/t FOB. Bright stock was heard at $800/t-$820/t, following a downward adjustment the previous week.

Group II base oils were steady at $630/t-$650/t for 150N and at $840/t-$860/t for the 500N/600N grades.

In the Group III segment, 4 centiStoke and 6 cSt oils were holding at $770/t-$790/t, while 8 cSt was unchanged at $750/t-$770/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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