Asia Base Oil Price Report


Base oil values in Asia appear to have plateaued amid crude and feedstock price uncertainties, soft demand outlook for downstream applications, and tight conditions for certain grades.

Volatile crude and raw material prices have turned buyers cautious at a time when demand from downstream markets was expected to start declining.

The spring season brought about increased demand for base oils for finished lubricant manufacturing, but as the summer activity starts to wind down, requirements were anticipated to ebb as well.

This will likely coincide with the return of a number of plants to production, following planned turnarounds.

In South Korea, producer SK Lubricants was expected to restart its base oil unit in Ulsan this month. SKs unit, which has capacity to produce 700,000 t/y of Group II and 1.3 million t/y of Group III base oils was taken off-line in early June for planned maintenance.

There were expectations that due to the turnaround, the producer would be focusing on meeting contractual commitments and would not be shipping spot cargoes to China in July, but there was no producer confirmation about these plans.

In China, Sinopec Maoming Petrochemical was heard to be planning to restart its 400,000 t/y Group II/III base oils unit in August, having postponed the restart date from an earlier date in May. Aside from routine maintenance, the Group III unit was heard to have been upgraded.

Also in China, Shandong Hengrunde was expected to have taken its 200,000 t/y Group II base oils plant off-line in June for a turnaround that will last almost two months.

The producers did not confirm the turnaround schedule at these plants.

Despite the imminent restart of some of these facilities, the market remained fairly tight given a busy turnaround schedule earlier in the year and reduced imports from Europe and the U.S., where snug domestic supply had limited the ability of producers to ship product to other regions.

China was somewhat an exception in that several cargoes from Poland and Spain were heard to have been imported in the first half of the year, bolstering existing inventories.

The light viscosity base oils were said to be in adequate supply and prices were exposed to downward pressure.

In contrast, the heavy-vis grades such as the Group I SN500 and Group II 500/600N were tighter in the region, and consequently, spot prices for these cuts were less exposed to erosion.

Bright stock appeared to be an exception within the heavy-vis group, particularly in China, as prices were said to be under pressure due to ample availability.

Additionally, the Luberef plant in Yanbu’ al Bahr, Saudi Arabia, which has been expanded to produce Group II and additional volumes of bright stock, was also heard to be getting ready to start shipping product at the end of the third quarter.

The situation in the Group III segment was also thought to be on the verge of a change.

While the Group III segment is generally oversupplied, an unexpected shutdown at the Shell-Qatar Petroleum Pearl gas-to-liquids plant in Ras Laffan, Qatar, which started in February, has constricted global availability of Group III grades.

The producer had to secure cargoes from other suppliers for its own downstream lubricant operations, which tightened the market and drove spot prices up, although not to the same extent as their Group I and II counterparts.

However, the Pearl GTL plant was heard to be in the process of restarting and product was anticipated to be available this month, bringing a change to the landscape observed during the first half of the year.

At the same time, Abu Dhabi National Oil Co (Adnoc) has been shipping large quantities of Group III oils out of its plant in Ruwais, United Arab Emirates. Participants said that sales have been strong, despite the fact that the product lacked some approvals. Adnoc is working on getting the original equipment manufacturer approvals needed, and was confident that it would be able to increase shipments into Asia and the U.S. next year, a source familiar with the companys operations said.

Upstream, crude oil prices slipped after posting gains over several sessions on news that Libya had increased crude production to more than 1 million barrels a day for the first time in four years. Oil prices had recovered the previous week, following reports of a decrease in U.S. shale oil production.

ICE Brent Singapore August futures were trading at $47.67 per barrel on July 2, up from $45.97/bbl on June 26.

Base oil spot prices were assessed as generally unchanged from the previous week, given a lack of active trading caused by uncertainty over crude oil price direction and prospects in downstream markets.

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 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 heard at $560/t-$590/t, and SN500 was stable at $770/t-$790/t FOB. Bright stock was hovering at $790/t-$810/t.

Group II 150N was assessed at $620/t-$640/t, and the 500N/600N grades were steady at $840/t-$860/t, all FOB Asia.

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

Gabriela Wheeler can be reached directly at

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