Asia Base Oil Price Report


The base oil market in Asia remains soft, with demand described as sluggish and spot prices exposed to downward pressure.

A few sellers appeared willing to negotiate cargoes to be loaded before the end of the year, and some pricing concessions were being made to move material out of the tanks.

Despite these incentives, purchasing appetite has not picked up substantially because buyers prefer to end the year with lean inventories and hesitate to commit to large quantities.

Consumers in India were heard to be taking advantage of the sliding prices in other regions, and a couple of cargoes were understood to have been booked from the United States and the Middle East.

One of the cargoes involves about 10-15,000 metric tons of base oils from the U.S. Gulf Coast to the west coast of India, although it could not be determined whether this was a contract parcel, or a spot deal.

There were also reports that an API Group I cargo of Iranian origin had loaded for delivery into India, despite earlier concerns that base oils would not be moving out of Iran due to U.S.-imposed sanctions.

Competitive offers of Middle Eastern Group II and III material into India continue to be mentioned as well, and those blenders who do not need specific approvals for Group III oils are able to source product at very low levels compared to material with full slates of finished lubricant approvals. End-users seemed keen to use these cuts despite a lack of technical requirements for a Group III base oil in their downstream applications, because of competitive pricing.

Asian suppliers expressed concern that the movement of product from the Middle East into India and China was displacing supply that typically came from within the region, with these cargoes now having to find new homes.

Additionally, with the start of the ExxonMobil Group II plant in Rotterdam, Netherlands, in the first quarter of the year, export opportunities into Europe enjoyed by Asian suppliers in recent years were expected to diminish.

ExxonMobil itself had started to ship product out of its Singapore plant to Europe to establish a customer base there, in preparation for the start-up of its Rotterdam plant. Once production stabilizes and product is shipped out of Rotterdam, the cargoes from Singapore will no longer be needed in Europe, sources speculated.

Production levels were also expected to grow in Asia, due to new capacity in China – including Hainan Handi Sunshine Petrochemical‘s Group II and III expansion on the island of Hainan and Hengli Petrochemicals construction of a Group II/III plant at Dalian – decreasing China’s need for imports.

The one source that appeared to have dried up in terms of exports to China was Russia, as little if any material was heard to have been fixed to China in recent weeks.

Aside from all of these factors, falling crude oil and feedstock values continued to impact price ideas in Asia.

Crude oil futures moved lower early in the week on reports of a rise in monthly OPEC output, but a weekly decline in U.S. crude supplies and production allowed prices to recover some of the lost territory.

Record output from Saudi Arabia in November lifted overall oil production from OPEC, the International Energy Agency (IEA) said Thursday. The news spread skepticism that the planned production cuts that were expected to begin at the start of the new year would be effective.

OPEC and 10 non-OPEC oil producers agreed last week to implement production cuts of 1.2 million barrels per day for six months, with a full agreement to be finalized in January.

OPECs output was also boosted by record production from the United Arab Emirates, which increased output by 110,000 bbl/day to hit 3.33 million bbl/day, passing Iran to become the groups third-largest producer, reported.

Higher output from Saudi Arabia and the U.A.E. offset sharp declines for Iran caused by U.S. sanctions on Iran’s oil industry, the IEA said.

Brent February futures traded at $60.73/bbl Thursday afternoon on the London-based ICE Futures Europe exchange, up from $59.44/bbl on Dec. 7.

Base oil spot prices in Asia were assessed stable to soft, with the heavy-viscosity grades notionally adjusted down to reflect current discussions and published numbers widely accepted as benchmarks in the region.

Ex-tank Singapore prices for Group I solvent neutral 150 were unchanged at $760 per metric ton to $780/t, while SN500 was at $790/t-$810/t. Bright stock was holding at $880/t-$900/t, all ex-tank Singapore.

Group II 150 neutral was hovering at $780/t-$810/t and 500N was near $800/t-$820/t, all ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed at $690/t-$710/t, while SN500 was adjusted down by $20/t to $680/t-$700/t. Bright stock was steady at $810/t-$830/t, FOB Asia.

Group II 150N was heard at $680/t-$700/t FOB Asia, while 500N and 600N edged down by $10/t to $700/t-$720/t, FOB Asia.

In the Group III segment, the 4 centiStoke grade was steady at $860-$880/t, and 6 cSt was gauged at $870/t-$890/t. The 8 cSt grade was unchanged from a week ago at $720/t-$750/t, FOB Asia.

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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