Asia Base Oil Price Report


Ongoing changes in the global base oil landscape appear to be impacting trade in Asia as buyers prefer to watch developments and appraise conditions before securing volumes.

With a number of base oil plants returning to operation and a seasonal demand slowdown contributing to a lengthening in supply, the sense of an urgent need to lay hands on any available volumes seems to be subsiding, although some segments remain fairly tight.

This has led to a slower pace in the spot segment, but contract cargoes continued to be shipped as planned.

Consumers were heard to be assessing options before committing to a particular spot cargo, as availability appears to be more plentiful.

A number of base oil plants in the region have resumed production following planned turnarounds. This includes facilities in South Korea, China and Japan.

In other regions, unplanned outages were also being remediated, and this should result in more purchase options in coming months.

One of these outages took place at the Shell-Qatar Petroleum Pearl gas-to-liquids (GTL) refinery in Ras Laffan, Qatar, with base oil production coming to a stop in February following operation issues at the refinery which started in November.

However, the base oil plant was understood to have been restarted and product was expected to be available next month.

The outage had brought about a general tightening of API Group II and III supply as both the producer and buyers had looked for alternative sources of base oils. The unit can produce 300,000 metric tons per year of Group II and 1,072,000 t/y of Group III base oils, according to LubesnGreases Global Guide to Base Oil Refining.

Given that supply from the Pearl GTL plant was anticipated to become available very soon, other suppliers have tried to protect market positions by offering attractive pricing over the last several weeks.

This was the case of another Middle East producer, who has reportedly lowered pricing into China and other Asian destinations for June and July transactions, although specific price points could not be obtained.

Northeast Asian producers were also heard to be negotiating July and August shipments, but prices were not as low as consumers had hoped.

Buying and selling ideas were standing apart, sources said, as buyers expected prices to come down on improved availability and volatile feedstock and crude oil prices. Crude oil prices have slipped substantially from indications in the first few months of the year.

At the same time, base oil indications in countries such as India appeared to be holding steady, particularly for Group I shipments, given a generally tight supply scenario for these cuts from domestic suppliers and sources like the Middle East.

Crude oil futures have also oscillated in recent weeks on political tensions in the Middle East and increases in oil output in the U.S.

Oil prices were slightly down in early trade on Monday, retreating after a climb of more than 5 percent the previous week as traders focused on rising U.S. crude production.

ICE Brent Singapore September futures were trading at $49.06 per barrel on July 17, down from $46.68/bbl on July 10.

Base oil requirements were heard to have weakened in Asia on account of sluggish conditions in downstream applications.

Uncertainties over the economic wellbeing of countries in Asia was said to be weighing on lubricant producers sentiment, although news about growth rates in a key market, China, was encouraging this week.

Chinas gross domestic product registered a stronger-than-expected 6.9 percent in the second quarter, the same rate as the first quarter, the National Bureau of Statistics said on Monday. That was higher analysts expectations of a 6.8 percent growth rate, news reports said.

Chinas domestic daily crude production averaged 4 million barrels per day in the first half of 2017 – down 5.1 percent from a year earlier -and imports rose 14 percent to an average of 8.5 million b/d, cementing Chinas position as the worlds leading energy importer, according to MarketWatch.

As a result of the current conditions, base oil price assessments in Asia were stable to soft as some ranges were notionally adjusted down to reflect current market discussions and sentiment amid a lack of reported transactions.

On an ex-tank Singapore basis, Group I solvent neutral 150 was unchanged at $700-$720 per metric ton. SN500 was at $860/t-$880/t, and bright stock was 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 down by $10/t at $560/t-$580/t, and SN500 was also down $10/t at $760/t-$780/t FOB. Bright stock was steady at $790/t-$810/t.

Group II 150N was discussed at $620/t-$640/t, and the 500N/600N grades were assessed down by $10/t at $830/t-$850/t, all FOB Asia.

In the Group III segment, all grades were notionally revised down by $10/t, with the 4 centiStoke and the 6 cSt grades assessed at $760/t-$780/t, and the 8cSt cut at $740/t-$760/t FOB Asia.

Gabriela Wheeler can be reached directly at

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