Asia Base Oil Price Report


There was an upswing in spot pricing for some of Asias base oils, driven by a regional tightening of supply and increased export inquiries on the back of refinery outages and a force majeure declaration in the U.S.

Several U.S. Gulf Coast base oil plants were forced to shut down as Hurricane Harvey caused record-level flooding in Texas and Louisiana, with a number of units unable to restart because of damage or a lack of feedstock supply.

It was heard that ExxonMobil had begun the restart process at its Baytown refinery, which houses a 511,000 metric tons per year API Group I and 911,000 t/y Group II base oil plant, but it could not be confirmed whether base oil production would also be restored soon.

Perhaps the most crucial outage was the one experienced by Motiva at its 2,017,000 t/y Group II unit in Port Arthur, Texas. The refinery at that location was taken off-line due to flooding, and the producer declared force majeure on all base oils produced at that location on September 12.

Details about Motivas allocation plan were not disclosed, but buyers were extremely concerned about a possible shortage of product and raced to contact alternative suppliers to secure product for the next few weeks.

A number of suppliers, both in the U.S. and Asia, received calls from customers who typically do not purchase from them as there was concern that U.S. production would not be sufficient to cover requirements.

Not only were Group II producers approached about the availability of additional volumes, but also Group I suppliers, who noted that supplies of some grades were already fairly tight before the problems caused by Hurricane Harvey emerged.

Another U.S. facility that Asian players were keeping an eye on was the Excel Paralubes plant in Westlake, Louisiana, which has capacity of 1,111,000 t/y of Group II base oils. Production from this unit is marketed by Phillips 66 and Flint Hills Resources.

There were reports that the plant had not been affected by the hurricane and was running at normal rates, but some of the shipments may have suffered delays because of road, railway, and port closures.

As a result of a general tightening of supplies and expectations that the outages in the U.S. would have major repercussions in other regions, some spot indications in Asia started to move up.

However, a couple of participants warned that the anxiety caused by the outages in the U.S. may be overstated, because the production shutdowns came during the fall season, when demand typically slows down.

They also pointed out that by the time Asian cargoes shipped to the U.S. arrived, it may be too late to fill the gaps produced by the current outages.

Nevertheless, others countered that it was not yet clear how long the outages and force majeure would last, and if they were longer than expected, then the situation could turn more dire than projected.

At the same time, interest from Asian buyers was fairly moderate, and not many regional consumers were in a position to accept higher offers.

In China, market activity tends to be tempered during October due to the National Golden Week holidays, and base oil requirements were likely to be reduced during that period as many manufacturers either cut back or idle operations.

Also in China, it was heard that Hainan Handi Sunshine Petrochemical Ltd. would be postponing its turnaround from September to October. The plant in Hainan can produce 300,000 t/y of Group II base oils.

Meanwhile, in the Group III segment, reports circulated that Abu Dhabi National Oil Co. (Adnoc) continued to offer Group III cargoes at competitive prices, and that a 6,000 metric ton cargo from the producer was scheduled to arrive in China at the end of September.

Asian base oil price assessments were stable to firm this week as the Group II grades edged up on heightened demand, but a number of uncertainties still affected market conditions.

On an ex-tank Singapore basis, Group I SN150 was unchanged between U.S. $670 and $690 per metric ton. SN500 and bright stock were holding at $830/t-$850/t and $920/t-$940/t, respectively.

Group II 150 neutral inched up by $10/t to $680/t-$700/t, and 500N was also up by $10/t at $890/t-$910/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was steady at $560/t-$580/t. The SN500 cut was assessed at $710/t-$730/t FOB Asia and bright stock was unchanged at $750/t-$770/t FOB Asia.

Group II 150 neutral was assessed up by $10/t at $580-600/t, and the 500N/600N grades were also higher by $10/t at $800/t-$820/t, all FOB Asia.

In the Group III segment, prices remained unchanged on a lack of reported transactions – with the 4 centiStoke and the 6 cSt grades gauged at $750/t-$770/t and the 8 cSt cut at $730/t-$750/t FOB Asia.

Upstream, crude oil prices fell on Friday as global markets weakened following North Koreas latest missile launch, but values remained close to the five-month highs reached this week on positive demand forecasts and U.S. refineries restarting output of crude products.

North Korea fired a missile that flew over Japans northern island of Hokkaido into the Pacific Ocean on Friday, South Korean and Japanese officials said.

OPEC this week forecast higher oil demand in 2018 and pointed to signs of a tighter global market, indicating that its deal with non-OPEC states to cut output is helping control a general glut, according to The Economic Times.

ICE Brent Singapore November futures were hovering at $55.68 per barrel at the close of Asias trading on September 18, from $53.59/bbl on September 11.

Gabriela Wheeler can be reached directly at

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