The softer demand, combined with the restart of a number of base oil plants not only in Asia, but in the Middle East as well – following scheduled and unplanned turnarounds – was expected to bring about increased availability of most grades.

In South Korea, improved supply of API Group II and III cuts was likely to follow SK Lubricants restart of its base oil unit in Ulsan. 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 (according to LubesnGreasesGlobal Guide to Base Oil Refining) was taken off-line in early June for approximately one month. The producer exports to many different countries, including China and the U.S.

In Japan, Idemitsu Kosan was understood to have restarted its refinery and base oil unit in Chiba, Japan, in late June. Regular contract supply from the producer was not affected by the shutdown, according to sources familiar with the producers operations. Idemitsus base oil plant can produce 123,000 t/y of Group I, 138,000 t/y of Group II and 44,000 t/y of Group III oils.

Also in Japan, JX Nippon Oil was heard to have shut its 209,000 t/y Group I plant in Mizushima for two and a half months in early May, and was expected to resume production in mid July. The companys second base oil unit in Mizushima was not anticipated to be affected by the turnaround.

Additionally, Chinese producer Sinopec Maoming Petrochemical was heard to be planning to restart its 400,000 t/y Group II/III base oils unit in August, following maintenance work and an upgrade at the plant. This comes after the resumption of output at other plants in China earlier in the year, although it was heard that some of them were running at reduced rates.

Producer confirmation about the shutdown schedule was not forthcoming.

In the Middle East, the Shell-Qatar Petroleum Pearl gas-to-liquids refinery in Ras Laffan, Qatar, was reportedly in restart mode, and product was expected to be available this month, but an update about the status of the plant was not forthcoming.

Shell has had to secure base oils from other suppliers to feed its own downstream lubricant operations, leading to a tightening of Group II and III supplies, sources noted, but if the plant streams, this may no longer be the case.

The tight base oil conditions in the region had been placing upward pressure throughout the first half of the year, leading to a relentless climb in base oil pricing.

The trend appears to be reversing, however, as availability has begun to lengthen and spot prices have come under pressure.

While producers were trying to maintain offers, buyers bids were reflecting decreased price expectations, and a significant gap separated buying and selling ideas.

The downward pressure was evident in domestic prices in China and Taiwan, where local producers were heard to have adjusted prices down for July transactions.

Domestic prices in China were reported to have been trimmed due to ample availability of material, while importers were being conservative about securing additional volumes.

Participants also mentioned that some suppliers had started to cut offers into China in response to the softening demand and increased availability of spot supply.

Abu Dhabi National Oil Co. was heard to have lowered its Group III offers in China by about $30 per metric ton in June and further reductions were being mentioned for July shipments.

In Taiwan, Formosa Petrochemical Corp. was heard to have lowered its domestic list prices for July shipments of API Group II base oils.

The producer reduced its 70 neutral list price by New Taiwan Dollar 11 cents per liter from June values. The 150N cut was also trimmed by NT $0.11/l, while the 500N was lowered by NT$0.53/l for July transactions.

These decreases follow similar downward adjustments implemented at the beginning of June, and were thought to come in response to lackluster domestic demand.

The producer was also heard to be planning to reduce operating rates in July because of maintenance work at upstream refining units.

In India, offers of Group I cuts of Middle Eastern origin for July shipment were also heard to have softened compared to June numbers on account of increased supply following the end of Ramadan.

Except for the local price adjustments described above, base oil prices in Asia remained generally unchanged from the previous week as participants assessed product needs and monitored developments in the crude oil sector.

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

Group II 150 neutral was holding 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 unchanged at $770/t-$790/t FOB. Bright stock was also steady at $790/t-$810/t.

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

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

Upstream, crude oil futures registered modest gains on Monday, but were still sensitive to changes in crude production levels in non-OPEC oil producing countries like the U.S., and output issues in Nigeria and Libya.

ICE Brent Singapore September futures were trading at $46.68 per barrel on July 10, down from $47.67/bbl for August futures on July 2.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.