Activity in many downstream segments tends to decline in the summer months following a busy spring production cycle, and base oil buyers prefer to manage inventories carefully to avoid a product overhang during the rest of the year.

Crude oil price fluctuations in recent weeks were also unsettling, as numbers were down one week and up the next, making it difficult for participants to predict base stocks price direction.

A number of base oil producers were heard to be considering a cutback in operating rates to keep supply and demand more balanced in the region and avoid accumulating high-cost inventories.

While there had been a string of plant turnarounds in the first half of the year, there were fewer shutdowns scheduled for the second half, and buyers expected availability to improve.

In China, it was heard that a couple of smaller plants would be undergoing turnarounds before the end of the year, but this was not expected to have a significant impact on the overall market supply.

Chinese producer Sinopec Maoming Petrochemical was heard to be planning to restart its API Group II/III base oils unit in Guangdong province in August, following an extended turnaround. The plant has capacity to produce 400,000 metric tons per year of base oils, according to LubesnGreases Global Guide to Base Oil Refining.

The Asian base oil segment was generally deemed well-supplied, although some base oil grades were tighter than others, allowing spot values for these grades to remain fairly stable.

Additionally, strong requirements for naphthenic base stocks were keeping availability of pale oils on the snug side in Asia, with imports said to be flowing steadily from origins such as the United States.

Spot pricing for the heavier paraffinic oils in the Group I category was said to be exposed to downward pressure this week, as buying activity had turned sluggish and producers and buyers adjusted their price expectations for August shipments.

Bids and offers for bright stock also edged down as demand was expected to weaken in the second half of the year, and buyers were less likely to secure large cargoes of this product.

The lighter grades have already undergone decreases in recent weeks and were generally unchanged week on week.

On an ex-tank Singapore basis, Group I solvent neutral 150 was stable at $700/t-$720/t. SN500 was heard to be down $10/t at $850/t-$870/t, while bright stock was also down by $10/t, at $940/t-$960/t.

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

On an FOB Asia basis, Group I SN150 was holding at $560/t-$580/t, and SN500 was revised down by $20/t-$30/t to $730/t-$760/t FOB on lower buying and selling indications. Bright stock was adjusted down by $30/t to $760/t-$780/t to reflect discussions for August shipments.

Group II 150N was unchanged at $600/t-$620/t, following a decrease last week, and the 500N/600N grades were down by $10/t at $820/t-$840/t, all FOB Asia.

In the Group III segment, the 4 centiStoke and the 6 cSt grades were heard at $760/t-$780/t, and the 8 cSt cut at $740/t-$760/t FOB Asia, but participants said this segment was likely to be under pressure as supply was expected to improve in the next few weeks, with a large Middle East supplier resuming production.

Upstream, crude oil prices inched higher during the week, reaching new two-month highs and posting the strongest weekly percentage gains this year as global supply and demand seemed to be more balanced, and Saudi Arabia vowed to trim output in August.

ICE Brent Singapore September futures were trading at $52.51 per barrel on July 31, from $47.82/bbl on July 24.

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