Asia Base Oil Price Report


Base oil prices stayed mostly flat in Asia as participants sought direction in a market muddled by softer feedstock values against snug supply for a number of grades.

While base oil producers tried to maintain current spot offers, pointing at tight supply and ongoing production outages to support firm numbers, buyers cited lower feedstock and crude oil values as justification for weaker pricing.

Crude oil futures have fallen over 20 percent from their peak in February, despite efforts by OPEC members to limit production and stabilize prices.

Oil remained under pressure on concerns that the global supply glut would persist as U.S. shale production continues to grow along with production from both Libya and Nigeria thats been rising since the beginning of the year.

ICE Brent Singapore August futures settled at $45.97 per barrel on June 26, down from $47.17/bbl on June 19.

Base oil buyers also maintained that producers margins had improved since last year and that there was no reason to raise spot prices as demand typically starts to decline in August while supply lengthens.

Finished lubricant producers were concerned that demand in the downstream segments was not showing definitive signs of improvement, and base oil purchases were likely to be affected by this trend.

Economic uncertainties in many countries of the region were blamed for a slowdown in the automotive and industrial segments, which are the largest consumers of lubricants.

Some base oil grades such as the heavy-viscosity Group I SN500 and the Group II 500/600N were deemed on the tight side in Asia, which translated into stable to firm price indications.

The lighter grades such as Group I SN150 and Group II 150N were more readily available, and as a result, prices appeared to be under pressure – particularly in key markets such as China, where supplies were said to be plentiful.

Local supply of these grades has improved in China over the last few weeks, leading to more competitive domestic prices. These were considered to be more attractive than the price of imports, limiting the buying interest for foreign material, according to sources.

Likewise, supply of bright stock was heard to have lengthened in the region, leading to slightly lower spot ideas, particularly in China, where large amounts of bright stock had been imported in the first half of the year.

This movement had taken place at a time when turnarounds at Group I facilities in Thailand, Japan, and China had affected bright stock availability.

Compared to the light-vis cuts and bright stock, the heavier grades remained tight in Asia on account of recent and ongoing turnarounds at a number of base oil plants.

South Korean producer SK Lubricants was heard to have embarked on a turnaround at its base oil unit in Ulsan 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 and the supplier exports to China on a regular basis. To date, the producer hasnt confirmed the turnaround schedule.

In Taiwan, despite the fact that Formosa Petrochemical Corp. was able to restart its Group II plant in Mailiao on June 17 – following a brief unplanned outage of slightly over a week – there were reports that the supplier would not offer spot cargoes for July shipment into China, but would be covering contractual obligations.

Formosa was also expected to meet all domestic requirements in July, as the producer prioritizes local consumers.

Trading was somewhat subdued in some countries due to the Eid al-Fitr holiday, together with a lack of clear price direction, which kept many players on the sidelines.

Prices were largely stable from last week, but were notionally assessed down for some grades to reflect levels currently being discussed.

On an ex-tank Singapore basis, Group I solvent neutral 150 was steady at between $700 per metric ton and $720/t, SN500 at $860/t-$880/t, and bright stock was marginally down by $10/t at $950/t-$970/t.

Group II 150 neutral was unchanged at $700/t-$720/t, and 500N at $910/t-$930/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was slightly down by $10/t at $560/t-$590/t, and SN500 was stable at $770/t-$790/t FOB. Bright stock was assessed down by $10/t at $790/t-$810/t.

Group II 150N was also down by $10/t at $620/t-$640/t, but the 500N/600N grades were steady at $840/t-$860/t.

In the Group III segment, 4 centiStoke and 6 cSt oils were hovering at $770/t-$790/t, while 8 cSt was gauged at $750/t-$770/t, all FOB Asia.

Gabriela Wheeler can be reached directly at

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