Asia Base Oil Price Report


Base oil prices in Asia received some support from the recent strengthening in crude oil values, but the fact that the market was more than adequately supplied undermined suppliers efforts to lift offer levels.

Aside from ample regional production, there has been a wave of imports arriving into the region from the United States and the Middle East, although one Middle Eastern plant was heard to be off-line and this was partly the reason why there was an increase in cargoes from the United States and Northeast Asia into destinations such as India.

The Luberef plant in Yanbu, Saudi Arabia, was heard to be shut down due to maintenance work at an upstream unit. The plant was expected to be down for at least two months, and as a result, buyers who regularly receive shipments from the producer have resorted to securing product from other locations. The Yanbu unit can produce 175,000 metric tons per year of Group I and 708,000 t/y of Group II base oils, and a capacity expansion at the site was completed last year.

Since several cargoes have already arrived and a few more were anticipated to reach Indian shores over the next few weeks, consumers seemed to be well-supplied and were expected to be more conservative about the amounts of product they would take moving forward.

Meanwhile, in Northeast Asia, most base oil plants have been running at close to full capacity since last November, which has only contributed to the long supply levels.

However, at least one producer in South Korea, S-Oil, was reported to be preparing to take its base oil plant off-line in March for routine maintenance. S-Oils unit can produce over one million metric tons of Group II and slightly below one million t/y of Group III base oils. It was not clear whether the turnaround would be affecting all of the refiners output, but there was talk that the outage would result in reduced spot availability.

An increase in demand levels during the spring production season for lubricants was also anticipated to help alleviate the bulging inventories present both at consumers, as well as at producers sites.

While demand has not shown a significant uptick, suppliers remained optimistic that activity would become more robust in March, as the first few signs of improved order levels have started to emerge.

Meanwhile, market players were keeping a watchful eye on crude oil prices, as numbers have climbed steadily over the last few weeks, with Brent leaping to $67 per barrel last week, but softening to around $65/bbl this week.

Crude futures were mixed on Thursday, with West Texas Intermediate moving up and Brent dipping slightly. Prices had edged up on Wednesday after Saudi Arabias oil minister dismissed President Donald Trumps request to take it easy on production cuts, which OPEC and non-OPEC members have implemented in order to boost prices. An unexpected drop in U.S. crude stockpiles provided additional support to WTI futures. However, on Thursday, concerns about the unresolved U.S.-China trade dispute pressured prices down.

On Feb. 28, Brent April futures were trading at $65.98 per barrel on the London-based ICE Futures Europe exchange, down from $66.88/bbl on Feb. 21.

Base oil spot prices in Asia were largely flat during the week, as consumers assessed their product needs, while producers discussed offer levels with their customers and hoped to conclude March shipments.

Ex-tank Singapore prices for Group I solvent neutral 150 were unchanged at $740-$760/t per metric ton, while SN500 was also steady at $750/t-$790/t. Bright stock was heard at $870/t-$890/t, all ex-tank Singapore.

Group II 150 neutral was assessed at $750/t-$800/t and 500N at $760/t-$810/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was gauged at $650/t-$690/t, while the SN500 was hovering at $600/t-$620/t. Bright stock was unchanged at $780/t-$800/t, FOB Asia.

Group II 150N was steady at $590/t-$610/t FOB Asia, while the 500N and 600N cuts were heard near $600/t-$620/t, FOB Asia.

In the Group III segment, the 4 centiStoke grade was holding at $820-$860/t and the 6 cSt at $830/t-$880/t. The 8 cSt grade was assessed 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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