Asia Base Oil Price Report


Base oil values were largely stable in Asia as participants took a step back to evaluate market conditions, and attempted to figure out future price direction, although small price fluctuations were observed at the local level in a couple of countries.

One of the fundamentals that has been of great concern to both buyers and sellers was the price of crude oil, which reached three-year highs about two weeks ago, and has plummeted since.

Oil prices fell to two-month lows earlier in the week, but recovered later after news about continuous production woes in Venezuela. The state-run oil company PdVSA has fallen behind on oil deliveries, and there is a severe backlog of vessels waiting to load at Venezuelas main oil port. PdVSA has told some customers it may declare force majeure, according to a Reuters report.

There were also rumblings that the Organization of the Petroleum Exporting Countries and other producers, including Russia, may not be lifting the output curbs that were implemented in 2017 to reduce a global crude glut. The group meets in Vienna on June 22 to discuss its position moving forward. OPEC might decide to increase output to address supply shortage from Iran and Venezuela.

On Thursday, June 7, Brent August futures were trading at $77.03 per barrel on the London-based ICE Futures Europe exchange, down from $77.75 per barrel on May 31.

Demand for base oils from downstream lubricant segments has started to slow down as the market enters a traditional lull period.

This has led to downward price adjustments for domestic base oil prices in the key market China, according to sources. Consumers were heard to be in possession of adequate inventories to cover current requirements, and buyers have been hesitant to secure additional product, leading to growing inventories for producers and importers.

Conversely, it was heard that domestic prices have been on the rise in Taiwan. According to reports, Taiwanese producer Formosa Petrochemical has increased its domestic list prices for June transactions.

Formosa’s lifted the list price of its API Group II 70 neutral grade by New Taiwan dollar (NT$) 0.66 per liter. Its Group II 150N cut was increased by NT$ 0.76/l, and its 500N by NT$ 0.23/liter.

While June is traditionally the time when activity in the market starts to slow down for various reasons – there are religious holidays, the summer vacation period starts, etc. – it is also a time when producers sometimes shut down their production units for maintenance.

In China, Sinopecs Nanjing Group II plant and Shandong Hengrundes Group II plant were expected to be taken off-line in June for routine turnarounds.

In Taiwan, Formosa Petrochemical was also expected to idle its 600,000 t/y Group II unit in July for about two months.

At the same time, it was heard that Sinopec Gaoqiao had restarted its 308,000 metric tons per year Group I and 310,000 t/y Group II unit in Gaoqiao, following a turnaround that had started in late April.

The steady flow of Group II and Group III oils of Middle Eastern origin was expected to continue into Asia and India, but the fate of Iranian Group I cargoes for export was slightly unclear due to the trade restrictions that may potentially be imposed on the country on the back of new United States sanctions, although these would not necessarily affect transactions into India.

Unlike the more delimited, local price adjustments, spot price indications in the region appeared to be holding at fairly stable levels, although there was some downward pressure starting to emerge on the heavy-viscosity cuts as demand for these oils tends to decline at this time of the year.

Spot prices on an ex-tank Singapore basis were steady, with Group I SN150 assessed at $780/t-$800/t, and the SN500 at $900/t-$920/t. Bright stock was also unchanged at $960/t-$980/t, all ex-tank Singapore.

Group II 150 neutral was heard at $820/t-$850/t, and the 500N cut was at $910/t-$930/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $700/t-$720/t, with the SN500 heard at $850/t-$870/t. Bright stock was unchanged for the time being at $880/t-$900/t FOB Asia.

Group II 150N was assessed at $750/t-$770/t, while the 500N/600N was heard at $830/t-$860/t, all FOB Asia.

In the Group III segment, the 4 centiStoke and 6 cSt grades were unchanged at $880-$900/t and $860/t-$880/t, respectively. The 8 cSt was also steady at $770/t-$790/t, FOB Asia.

Gabriela Wheeler can be reached directly at

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

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