Asia Base Oil Price Report


Softer demand, growing supply levels and volatile crude oil values dampened sentiment in Asian base oil markets, resulting in weaker spot prices.

A major refiner’s intent to lower contract prices for exports to China at the end of August also seemed to signal that prices had come under pressure in the region.

It was heard that the Singapore-based producer would be reducing the contract price of its API Group II 150 neutral base oil by US $30 per metric ton, whereas its 500N cut would be lowered by $45/t as of Aug. 31, following the depreciation of the local currency, the yuan, earlier in the month.

Trading in Asia was not only affected by intrinsic market fundamentals, but also by wider economic and political uncertainties.

The ongoing trade war between the United States and China – which has had widespread repercussions reaching beyond the two countries directly involved in the dispute – triggered concerns about slowing global economic growth.

The U.S. threatened to impose a new 10 percent tariff on $300 billion worth of Chinese imports last week, and China retaliated by announcing new tariffs on $75 billion worth of U.S. goods, with the first round of tariffs expected to become effective on Sept. 1, and the second on Dec. 15. Some products would see a 5 percent tariff and others 10 percent, with the list of affected products including many chemicals, plastics and, for the first time, U.S. crude oil, which would carry a 5 percent tariff.

The escalating dispute resulted in the stock market crashing and crude oil prices plummeting on Friday, but oil futures recovered earlier this week as China and the U.S. appeared to be willing to resume negotiations.

Oil futures then climbed on Wednesday, after a U.S. government report revealed a huge weekly drop in U.S. crude supplies along with a decline in petroleum products, which helped to ease concerns about a slowdown in demand.

On Thursday, Aug. 29, Brent October futures were trading at $60.42 per barrel on the London-based ICE Futures Europe exchange, and were hovering at $60.69/bbl on Aug. 22.

The industrial segments in China have been directly affected by prospects of reduced sales of Chinese goods and parts to the U.S., and this has curbed buying activity for lubricants and base oils.

The price of Group I bright stock, for example, has fallen to ten-year lows due to weak demand, reflecting a slowdown in Chinese industrial segments, transportation and manufacturing facilities that consume this particular base oil.

Importers have curtailed the purchase of not only imported bright stock, but other grades as well as demand remains lackluster and there appears to be growing domestic supply, which helps cover most of the current requirements.

Furthermore, the introduction of additional base oil capacity in China as several new units or expansions have come on stream over the last few months has made the country less dependent on foreign material, although some of the expected start-ups have been delayed. Handi Sunshine was heard to have delayed the start-up of a new unit in Hainan until early next year, from an original date in the second half of 2019, and other plants may be delayed as well.

As a result of reduced import activity in China, traditional Group II suppliers to the Chinese market such as Taiwan and South Korea have had to look for alternative homes for their production. Russian shipments of Group I volumes into China have also declined in recent months.

There were reports that a couple of 3,000 metric-ton Group II light-viscosity cargoes of Taiwanese and South Korean origin had made their way to Brownsville, Texas in mid-August. This appeared to be unusual as material arriving in Brownsville typically makes its way to Mexico and is supplied by U.S. producers at advantageous price levels, rather than via deep-sea shipments, sources said.

There have also been attempts to sell Asian Group II material to European consumers, but this implied smaller shipments and stiff competition with the local suppliers.

Spot activity in Asia remained subdued as the month came to an end. Talks for September cargoes have started, and were expected to pick up the pace over the next couple of weeks. The price ranges portrayed below have been revised to reflect current discussions.

Ex-tank Singapore Group I prices for the solvent neutral 150 grade were revised down by $10/t between $720/t-$740/t, while the SN500 was also down by $10/t at $770/t-$790/t. Bright stock was adjusted down by $20/t to $850/t-$870/t, all ex-tank Singapore.

Similarly, the Group II 150 neutral was assessed lower by $10/t at $750/t-$770/t, while the 500N was also down by $10/t at $760/t-$780/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was heard lower by $10/t this week at $600/t-$620/t, and the SN500 grade was adjusted down by $30/t at $560/t-$580/t. Bright stock also moved down by $30/t to $740/t-$760/t, FOB Asia.

Group II 150N was adjusted down by $20/t to $560/t-$580/t FOB Asia, while the 500N and 600N cuts edged down by $10/t to $580/t-$600/t, FOB Asia.

In the Group III segment, the 4 centiStoke was stable at $790-$820/t and the 6 cSt at $810/t-$855/t. The 8 cSt grade was holding at $710/t-$740/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.

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