Asia Base Oil Price Report


Some corners of the base oil market in Asia showed steady demand and snug availability, while others seemed to be well-supplied against slightly disappointing buying interest.

Sources expected the arrival of the spring season to translate into a more dynamic market scenario, but requirements in a few segments and in a number of Asian countries have been less vigorous than anticipated for this time of the year.

Despite the softer demand levels, supply remained generally strained due to a busy plant turnaround schedule in Asia and in other regions as well.

It was heard that base stock demand in China has been lagging compared to the same period last year. Suppliers had expected an increase in requirement levels following the Lunar New Year in mid-February. However, while consumers did come to the market to replenish inventories in March, buying interest turned out to be less substantial than expected.

Some observers voiced the opinion that uncertainties in terms of the countrys economic situation and geopolitical tensions were impacting consumer trends in general, and the lubricants segments did not seem to be an exception.

Participants were also keeping an eye on stocks in the chemical sector as prices fell on Wednesday on talk about a potential trade war between China and the United States.

Xinhua News Agency reported on Wednesday that China had announced that it had decided to increase tariffs on 106 products from the U.S. by 25 percent, including soybeans, automobiles, aircraft and chemical products.

The decision was made by the Customs Tariff Commission of the State Council in response to the U.S. administrations proposed additional tariff on a list of products imported from China worth 50 billion dollars – including products from industries such as aerospace, information and communication technology, robotics and machinery.

Another factor that may be affecting lubricant demand in the automotive sector in China is the fact that the government began to phase out a tax incentive on cars with small engines last year.

China raised the purchase tax on cars with engines of 1.6 liters or less to 7.5 percent, from a special rate of 5 percent, a policy that the government originally launched to stimulate sales in a weakening economy. It plans to return the rate to 10 percent in 2018. Automakers in China expected to see their weakest year of sales growth in at least two decades as a result, Reuters reported.

Additionally, demand for industrial lubricants was thought to have been impacted by the countrys drive to lower pollution, with a number of small manufacturing plants closing because they could not comply with the stricter regulations, and manufacturing activity in general understood to have declined.

Reports also circulated that domestic base oil prices in China had softened on account of the lukewarm demand and adequate availability of most grades.

Conversely, it was heard that domestic prices in Taiwan were moving up. Taiwanese producer Formosa Petrochemical was understood to have lifted its domestic list prices for April transactions.

Formosa raised the price of two of its Group II base oil grades, while leaving one unchanged.

The producers 70 neutral oil was not adjusted up for April business, while its 150N edged up by New Taiwan dollars (NT$) 0.23 per liter, and its 500N cut increased by NT$ 0.3/liter compared with March levels.

Meanwhile, some Asian producers were hoping to achieve steeper base oil spot levels given limited availability of certain grades and firm feedstock costs, but consumers have balked at the higher numbers and negotiations were said to be ongoing. Spot prices were assessed stable to slightly firmer week-on-week to reflect discussions and recent business.

On an ex-tank Singapore basis, Group I SN150 was assessed higher by $10/t at $750/t-$770/t, and the SN500 cut was steady at $850/t-$870/t. Bright stock was unchanged at $930/t-$950/t, all ex-tank Singapore.

Group II 150 neutral was notionally adjusted up by $10/t at $770/t-$790/t, and 500N was heard at $910/t-$930/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed up by $10/t at $690/t-$710/t, and the SN500 grade was at $780/t-$800/t. Bright stock was heard at $830/t-$860/t FOB Asia.

Group II 150N was also adjusted up by $10/t to $710/t-$730/t, and the 500N/600N also moved up $10/t to $810/t-$840/t, all FOB Asia.

In the Group III segment, discussions were taking place at higher levels for April transactions, and assessments were therefore revised up by $20/t, with the 4 centiStoke and 6 cSt grades hovering at $830/t-$850/t, and the 8 cSt at $810/t-$830/t, FOB Asia.

Upstream, crude oil futures were steady during mid-morning trade in Europe on Thursday, after fluctuating within a narrow range in previous sessions.

U.S. stocks data released on Wednesday lent some support to indications, following falls of over a dollar earlier. The data showed a larger-than-expected drop in U.S. crude stocks, attributed to an increase in U.S. crude exports and stronger refinery utilization rates.

On Thursday, April 5, Brent June futures were trading at $68.49 per barrel on the London-based ICE Futures Europe exchange, compared to $69.93 per barrel for May futures on March 29.

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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