Asia Base Oil Price Report


A lack of clear price direction and religious holidays in various countries have led to a static base oils market situation, with little fresh business reported.

Uncertainties surrounding crude oil and feedstock values have had a paralyzing effect on trade, as buyers prefer to wait and see whether base oil prices react to falling raw material costs, while some sellers expect crude oil to lend support to current indications.

Aside from recent increases in feedstock costs, base oil prices have also been supported by tightening supply, as a number of plants are either undergoing turnarounds or are slated for maintenance in the region over the next couple of months.

Crude futures jumped to two-week highs on Wednesday after a United States government report showed a more significant decline in domestic stocks that anticipated.

Gains were capped by another report that revealed a steady growth in U.S. crude production, coupled with talk about an increase in output from the Organization of the Petroleum Exporting countries in recent weeks. The group meets in Vienna on June 22 and is expected to address the question of whether current output quotas should remain in place.

On Thursday, June 14, Brent August futures were trading at $76.08 per barrel on the London-based ICE Futures Europe exchange, down from $77.03 per barrel on June 7.

Base stock activity has been dampened by the observance of the Ramadan and Eid holidays in several countries in Asia, together with the start of the summer season, which ushers in a slower pace in base oil and lubricant markets.

The heavy-viscosity cuts such as the Group I solvent neutral 500, together with bright stock, were said to be more exposed to downward pressure due to sluggish demand for these grades.

Moreover, adequate availability and competitive pricing of Group II 500 neutral have induced buyers to switch to this grade whenever substitution is possible, undermining demand for the Group I cut.

In India, Iranian Group I material has enjoyed healthy demand in the past, but it was heard that there had been fewer cargoes available from Iran in recent weeks. A number of Group I parcels were expected to be loaded in Iran after the Ramadan and Eid periods in late June, but buying interest for Group I and II cuts from other sources has blossomed as well.

Movements of Group III cargoes into diverse Asian destinations and India were also expected to pick up after the religious holidays.

Despite expectations of weakening demand in coming weeks, Asian base oil price indications have been holding at steady levels due to the prospect of tightening regional supply on the back of plant shutdowns.

In China, there were reports that Sinopecs Nanjing plant would be shutting down for maintenance this month. The unit can produce 200,000 metric tons per year of Group II base oils, according to LubesnGreases Guide to Global Base Oil Refining. There was no producer confirmation available about the shutdown schedule.

Also in China, Shandong Hengrundes Group II plant in Shandong was heard to have been taken off-line for maintenance the first week of June, but this could not be confirmed. The unit can produce 200,000 t/y of Group II base oils and was likely to be down until the end of the month or early July.

Another large plant was expected to be taken off-line in July as well. Formosa Petrochemicals Group II plant in Mailiao, Taiwan, was scheduled for a two-month turnaround, starting in July. The unit can produce 600,000 t/y of Group II oils, and the producer regularly exports term and spot cargoes to China. However, it was heard that no spot cargoes have been available and contract volumes have also been trimmed due to the imminent shutdown.

Due to the lack of discernible price direction, market players felt that values were in limbo and many preferred to delay purchases until a clearer picture emerged. As a result, spot numbers were largely unchanged from a week ago.

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

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

On an FOB Asia basis, Group I SN150 was steady at $700/t-$720/t, with the SN500 heard at $850/t-$870/t. Bright stock was slightly down by $10/t at $870/t-$890/t FOB Asia.

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

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

In related market news, Chinas National Development and Reform Commission announced a decrease in fuel prices last Friday, which went into effect on June 9, according to Xinhua News. The decrease, which followed five increases since the beginning of the year, was due to falling crude oil values in international markets. The retail price of gasoline dropped by Chinese Yuan 130 per metric ton, while the price of diesel declined by CNY125/t (or approximately U.S. $20/t and $19/t, respectively). Fluctuations in fuel prices influence driving patterns in China and can therefore have an impact on lubricant consumption.

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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