Asia Base Oil Price Report


The upward price trend seen in the Asian base oil market over the last few weeks appeared to have stalled on crude oil volatility and demand uncertainties.

Crude futures had been moving up earlier in the week, but retreated on Wednesday and Thursday, as a continued increase in U.S. oil production pushed down prices toward their lowest levels in three weeks.

Numbers slipped by more than 2 percent on Wednesday, weighed down by a report that showed U.S. oil production had achieved a new weekly record. U.S. President Donald Trumps talk about plans to implement tariffs on steel and aluminum imports also sparked concerns over a potential trade war and its impact on global demand for U.S. oil.

On Thursday, March 8, Brent futures were trading at $63.77 per barrel on the London-based ICE Futures Europe exchange, compared to $63.72 per barrel on March 1.

While base oil producers persisted on their attempts to improve margins by lifting offers – given the rise in crude oil values over the last four months – buyers have become hesitant about accepting the steeper levels as fundamentals such as raw material costs seemed to be shifting.

In key market such as China, supply was deemed ample to cover the current demand for product as many buyers had secured cargoes ahead of the Lunar New Year holidays in mid-February, and importers were less keen to commit to large cargoes.

Despite the looming possibility that the base oils market could become quite tight given ongoing and upcoming regional plant turnarounds, consumers felt that supplies from other regions might be available to fill the gap until these plants restarted.

In China, it was heard that there has been a steady influx of Middle East material, with United Arab Emirates producer Abu Dhabi National Oil Company (Adnoc) expected to ship about 10,000 metric tons of API Group III oils per month.

Demand for high performance Group III oils is growing steadily in China, as the government is tightening controls and regulations on pollution and car manufacturers are paying more attention to fuels and lubricants that comply with lower emissions standards.

Additionally, prices for some of these Group III cuts are very competitive compared to Group II oils, which encourages blenders to use them even in applications where there is no technical requirement for the higher performance oils.

Group II spot availability was expected to be somewhat tight in China due to the current turnaround at the SK Lubricants plant in South Korea, which could result in more limited spot volumes.

However, Group II imports from Taiwanese producer Formosa Petrochemical were anticipated to remain steady in March compared to February, while domestic output of Group I and II base oils was also expected to improve as plants were running well in China. The impact of reduced imports from Russia due to plant turnarounds during the first two months of the year appeared to be limited.

In South Korea, SK Lubricants Group II/III facilities were expected to have been taken off-line for a one-month turnaround in early March. SKs unit has capacity of 701,000 metric tons per year of Group II base oils and almost 1.3 million t/y of Group III cuts, according to LubesnGreases Global Guide to Base Oil Refining.

There were also reports that South Korean producer S-Oil would idle its Group III plant in Onsan for one month in March. S-Oils unit has a capacity to produce 1 million t/y of Group III base oils.

In Southeast Asia, it was heard that Petronas plant in Melaka, Malaysia, which can produce 268,000 t/y of Group III base oils, was shut down the last week of February and will remain off-line until the first week of April for routine maintenance.

Base oil trading in Asia was somewhat subdued this week as participants tried to assess price direction and conditions in downstream lubricant segments. Prices remained largely unchanged on account of a dearth in reported deals.

On an ex-tank Singapore basis, Group I SN150 was assessed steady at $740/t-$760/t, and the SN500 cut at $850/t-$870/t. Bright stock was unchanged from last week at $930/t-$950/t, all ex-tank Singapore.

Group II 150 neutral was holding at $760/t-$780/t, and 500N was heard at $910/t-$930/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged week on week at $680/t-$700/t, and the SN500 grade was steady at $780/t-$800/t. Bright stock was heard at $830/t-$860/t FOB Asia.

Group II 150N was assessed at $700/t-$720/t, and the 500N/600N was gauged at $800/t-$830/t, all FOB Asia.

In the Group III segment, the 4 centiStoke and 6 cSt grades were hovering at $810/t-$830/t, while the 8 cSt was holding at $790/t-$810/t, FOB Asia.

Gabriela Wheeler can be reached directly at

LubesnGreasesshall not be liable for commercial decisions based on the contents of this report.

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