Asia Base Oil Price Report


Spot base oil prices were slightly mixed in Asia this week, with some grades experiencing upward revisions, some remaining stable, and others showing a small downward adjustment as trading resumed following the early May holidays.

Buyers were said to be treading cautiously as there was no clear indication of where prices may be headed, with some observers noting that higher raw material costs in recent weeks continued to exert upward pressure, but a lack of strong buying interest for a number of cuts weighed down price indications.

This was the case with API Group I bright stock, as lackluster demand was heard to have lead to lower bids in key markets such as China.

Northeast Asian spot indications for bright stock were heard to have softened by up to U.S. dollars $20 per metric ton from the previous week on weaker demand in the region.

Chinese demand for bright stock from the industrial lubricant segment has softened in recent months as some manufacturing facilities have reduced rates, or shut down operations on account of the governments enforcement of stricter environmental controls.

Domestic availability of bright stock was considered more than adequate to cover current demand, while buying appetite for imports has weakened and was therefore exerting downward pressure on pricing.

A sharp reduction in the Group I volumes regularly shipped to China from Russia during May was not expected to have a significant impact for Chinese consumers. Prices ex-Europe have been rising given higher crude oil and feedstock costs, coupled with healthy demand, but the heftier numbers were not anticipated to gain much acceptance in China.

Demand for bright stock was also said to be somewhat sluggish in India, but requirements for other Group I grades was described as steady, although many users preferred to secure Group II cuts for certain applications where substitution was possible as prices were competitive.

Downward adjustments for certain base oil cuts have also taken place at the local level in a number of countries.

In Taiwan, Group II producer Formosa Petrochemical was understood to have adjusted down the domestic list price of its 70 neutral cut for May transactions. The 70N list price decreased by New Taiwan Dollars (NT$) 0.34 per liter.

Conversely, the producers Group II 150N domestic list price was lifted by NT$ 0.43/liter from April levels, while its Group II 500N base oil list price remained unchanged. The price adjustments were said to have been implemented in response to supply and demand factors.

Formosa was understood to have increased the volume of base oils shipped under contract into China last month. The producer is a regular exporter of both spot and contract cargoes to China, but domestic requirements in Taiwan take priority.

Prices of Group II cuts were generally deemed stable to slightly firmer in Asia, as supply and demand were balanced to tight, with higher production costs continuing to exert upward pressure on pricing.

Recent turnarounds in the region had resulted in slightly reduced availability, but imports from the Middle East and the United States helped alleviate the tightness.

Steeper raw material costs over the last several weeks have squeezed margins and base oil producers have therefore tried to raise offers, but have faced consumers resistance. However, climbing indications in Europe and the U.S. offered additional support to the higher selling indications. A majority of U.S. suppliers have announced posted price increases to be implemented throughout the month of May.

Spot assessments in Asia were adjusted up for some grades and lowered for bright stock this week, with the rest of the base oil slates remaining stable to reflect current market conditions.

In terms of ex-tank Singapore numbers, Group I SN150 was holding at $770/t-$790/t, while the SN500 was assessed at $900/t-$920/t. Bright stock was hovering at $960/t-$980/t, all ex-tank Singapore.

Group II 150 neutral was assessed at $800/t-$830/t, and the 500N cut at $910/t-$930/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged at $690/t-$710/t, with the SN500 hovering at $840/t-$860/t. Bright stock was down by $10/t at $870/t-$900/t FOB Asia.

Group II 150N was notionally adjusted up by $10/t to $740/t-$760/t, and the 500N/600N was also up by $10/t at $820/t-$850/t, all FOB Asia.

In the Group III segment, the 4 centiStoke and 6cSt grades moved up by $10/t to $880-$900/t and $860/t-$880/t, respectively. The 8 cSt was unchanged at $760/t-$780/t, FOB Asia.

Upstream, crude oil futures jumped by more than 3 percent on Wednesday, after climbing to the highest levels in three and a half years, on the back of a bigger-than-expected drawdown in oil inventories in the U.S. and the countrys decision to abandon a nuclear deal with Iran, which was announced on Tuesday.

On Thursday, May 10, Brent July futures were trading at $76.90 per barrel on the London-based ICE Futures Europe exchange, compared to $73.63 per barrel on May 3.

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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