Asia Base Oil Price Report


Sliding crude oil and feedstock prices provided a respite to base oil producers, who had been dealing with escalating production costs and lean margins against a backdrop of oversupply conditions.

Trading was also slightly subdued due to the start of Ramadan on May 5, observed in a number of countries in the region.

Following several weeks of continued rise in crude values, numbers have slipped on concerns over the ongoing United States and China trade conflict, which this week outweighed upward pressure from falling crude stockpiles in the U.S. “Heightened tensions between the world’s two biggest economies have clouded the outlook for global growth and oil demand,” Reuters reported on Thursday.

U.S. crude oil stocks fell by 4 million barrels in the week of May 3, the Energy Information Administration said on Wednesday, and this had temporarily stalled the fall in crude futures.

However, on Thursday, May 9, Brent July futures were trading at $69.60 per barrel on the London-based ICE Futures Europe exchange, down from $70.08/bbl on May 2.

Despite the softer raw material values, suppliers were still trying to recoup some of the lost margins, with a number of sellers heard to have adjusted prices up as the month of May got underway.

In Taiwan, Formosa Petrochemical Corp. was heard to have lifted the domestic list price of its API Group II base oils for May transactions.

The producer’s Group II 70 neutral was raised by New Taiwan Dollars (NT$) 0.20 per liter, while its 150N cut was also increased by NT$0.20/liter. The refiner’s 500N grade was marked up by NT$0.35/liter. This initiative follows increases implemented in March and April. (U.S. $1 is equivalent to NT$31.02, according to exchange rates on May 9).

While Formosa’s priority is to meet the local product demand, the producer exports a large part of its output, with a significant portion shipped to China under contract and for spot sales every month. It was heard that volumes for May shipment would be slightly larger than April’s, as the refiner’s base oil plant was running well and domestic demand remained steady.

It was also heard that domestic base oil producers in India had raised Group I prices for May transactions, and numbers in some cases have moved up by $20 per metric ton compared to April levels.

Asian suppliers continued to struggle with abundant inventories and looked for potential outlets for their products, sometimes resorting to lowering offer levels to attract orders. This was starting to be more evident in the Group III segment, where regional suppliers were competing with imports from the Middle East. Sources said that most discussions were taking place close to the lower end of the price ranges portrayed below.

Movements of Asian Group II cuts to Europe have dwindled slightly as prices in that region have softened, closing arbitrage opportunities for most cargoes. Additionally, the inception of new capacity from the ExxonMobil plant in Rotterdam, the Netherlands, has reduced the need to rely heavily on imports from Asia and the U.S.

The rate at which U.S. cargoes were being shipped to India and China earlier in the year has subsided as well, partly due to increased indications at origin and also because of market saturation. Imports from Singapore, South Korea, Malaysia, Qatar and Thailand also continue making their way into India.

While there have not been any direct imports of Iranian base oils noted, following the implementation of U.S. sanctions on Iranian oil exports, there continue to be reports that some material may be moving into a neighboring Middle Eastern nation and being re-exported to India, but this could not be confirmed.

Spot prices in Asia were generally reported as flat due to slackening business and weaker feedstock values this week.

Ex-tank Singapore Group I prices for the solvent neutral 150 grade were unchanged at $740-$760/t per metric ton, while the SN500 was steady at $790/t-$810/t. Bright stock was holding at $900/t-$920/t, all ex-tank Singapore.

Group II 150 neutral was heard at $780/t-$800/t, while the 500N was unchanged at $790/t-$820/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was hovering at $650/t-$680/t, and the SN500 grade was at $640/t-$660/t. Bright stock was heard at $790/t-$810/t, FOB Asia.

Group II 150N was assessed at $630/t-$650/t FOB Asia, while the 500N and 600N cuts were near $640/t-$660/t, FOB Asia.

In the Group III segment, the 4 centiStoke grade was mentioned at $830-$870/t and the 6 cSt was unchanged at $840/t-$885/t. The 8 cSt grade was steady at $730/t-$760/t, FOB Asia for fully-approved product.

Gabriela Wheeler can be reached directly at

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

Related Topics

Base Oil Reports    Base Stocks    Other