Asia Base Oil Price Report


Conditions in the base oil market in Asia were described as fairly healthy, but suppliers are starting to worry about a potential demand slowdown ahead of the Lunar New Year holidays in mid-February.

Although importers in the key market China have been eagerly trying to conclude business to ensure the arrival of cargoes before the holiday week, which starts on Feb. 15, it was heard that buyers had been somewhat reluctant to secure large cargoes as base stock prices have been edging up. Some preferred to delay purchases until after the holidays, in hopes that prices would have softened by then.

However, many players predicted that conditions would remain fairly unchanged given the steady climb in crude oil costs and the likelihood of tightening supply on the back of a number of upcoming plant turnarounds in the region.

Aside from a maintenance shutdown at SK Lubricants‘ API Group II/III facilities in South Korea in March, and a second one at Formosa Petrochemical‘s Group II plant in Taiwan later in the year, there were fresh reports that South Korean producer S-Oil would also be idling its API Group III plant in Onsan for one month in early March. S-Oil‘s unit has a capacity to produce 1.04 million metric tons per year of Group II and 1 million t/y of Group III base oils.

Some sources foresaw the turnaround schedule affecting mostly the Group II and III segments, where requirements are growing, and pointed out that new production in the Middle East might be available to fill the supply gaps.

Aside from the regular Middle Eastern suppliers, there were expectations that Luberef would start commercial sales of Group II base oils from its expanded plant in Yanbu’ al Bahr, Saudi Arabia. However, it was not yet clear when product from this plant would be coming to market. The inception of added base oils into the supply system has been slightly delayed from an original date of December 2017/January 2018, but this could not be confirmed with the producer directly. The plant’s expansion will allow the company to produce Group II and additional volumes of bright stock, resulting in a capacity of 175,000 t/y of Group I and 708,000 t/y of Group II base oils.

At the same time, base oil requirements were expected to pick up following the Lunar New Year festivities, especially in China, as lubricant producers would start to ramp up rates for the spring production season.

Supply conditions have also improved in the United States, which regularly exports large amounts of Group II base oils to Asia. While exports had been reduced during the last quarter of 2017 due to production outages on the U.S. Gulf Coast, producers have been rebuilding inventories and increasing the volumes offered for spot and export transactions.

Some countries such as India had also seen diminished Group I volumes coming from Iran during the last quarter of 2017 on the back of a couple of plant turnarounds there, but supply levels have increased and there are more cargoes on offer, although the segment was still considered strained.

Prices for Middle East exports have generally trended up in recent weeks, not only due to the market tightness, but because of higher crude oil values.

In terms of Group III cargoes, large quantities from a UAE producer were expected to arrive in China in the next couple of weeks. The supplier was heard to be offering attractive prices for these premium oils, but levels could not be ascertained.

Base oil spot prices in Asia were assessed as stable this week, following upward revisions last week, supported by high crude oil values and balanced-to-tight availability.

On an ex-tank Singapore basis, Group I SN150 was stable at $710/t-$730/t, while the SN500 grade was unchanged at $820/t-$840/t. Bright stock was hovering at $910/t-$930/t, all ex-tank Singapore.

Group II 150 neutral was gauged at $720/t-$740/t, and 500N at $890/t-$910/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was holding at $630/t-$650/t, and the SN500 grade at $740/t-$760/t, FOB Asia. Bright stock was unchanged at $810/t-$840/t.

Group II 150N was assessed at $640/t-$660/t, and the 500N/600N grades were at $780/t-$820/t, all FOB Asia.

In the Group III segment, 4 centiStoke and 6 cSt grades were steady at $790/t-$810/t, and the 8 cSt at $770/t-$790/t, FOB Asia.

In related market news, China increased the retail price of gasoline by Chinese Yuan 180 (U.S. $28) per metric ton and diesel by CNY 175/t as of Jan. 13, according to the National Development and Reform Commission. This is the first adjustment this year – with the previous one taking place fairly recently at the end of December – and it was said to be driven by rising international oil values, Beijing-based XinhuaNet reported. Changes in the country’s fuel pricing impacts driving patterns and lubricant consumption.

Climbing crude oil prices continued to be a matter of concern to base oil market participants.

Oil futures moved up on Tuesday, reversing the prior day’s decline after data showed that oil supplies in the U.S. registered a larger-than-expected inventory draw.

Additionally, Chinas state-owned oil and gas company China National Petroleum Corp. has boosted confidence in the strength of oil markets by forecasting that crude oil demand in China would jump by 4.6 percent this year to 12 million barrels per day, reported.

Brent crude futures were trading on the London-based ICE Futures Europe exchange at $69.33 per barrel on Thursday, Jan. 18, compared to $69.76 per barrel on Jan. 11.

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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