India received several cargoes from the United States since June, given that availability was plentiful there due to a drop in domestic demand brought about by the coronavirus pandemic. However, the tide turned on the back of unplanned shutdowns and reduced operating rates along the U.S. Gulf Coast, following a number of hurricanes and tropical storms, leading to a dearth in extra availability.

Taiwanese and South Korean producers offered additional API Group II cargoes to India, and more shipments were expected to move from these sources during October.

Taiwanese supply increased with the return to operations of Formosa Petrochemical, following a routine turnaround from early July till mid-August. An ongoing turnaround at S-Oil’s Group I and II plant in Ulsan has somewhat limited spot availability from that country, although the plant was expected to be restarted this week and gradually ramp up operating rates over the next few days.

One of the interesting things to watch will be whether China will still witness massive travel during the National Day holidays, as families typically visit their home towns during the festive period. This movement results in an increase in fuels and lubricants demand from the automotive and public transportation segments. The number of people traveling may be lower this year because of the coronavirus pandemic, although China has been able to control the spread quite effectively.

In the lead-up to the holidays, buying appetite for light-viscosity imports had abated in China, as there appeared to be enough local production to cover requirements. Chinese base oil plants have increased operating rates in recent weeks and were close to full capacity, according to sources. However, interest in heavy-viscosity grades and bright stock was still strong, but supplies were more difficult to come by.

The Group I segment was deemed tight in Asia, as regional production has declined in recent years, while demand remained fairly steady. With the implementation of pandemic-related lockdowns, industrial activity throughout Asia declined, but industrial lubricant consumption has since recovered, although not to pre-pandemic levels yet. Nevertheless, requirements for Group I heavy-viscosity grades and bright stock have seen a definite uptick, with spot cargoes moving from the Middle East and Southeast Asia to India, China, and several Southeast Asian ports as well.

A couple of Japanese Group I base oil plants were also expected to embark on routine turnarounds in the last quarter of the year, reducing regional availability. Cosmo Oil’s Group I plant in Yokkaichi and one of Eneos’ (formerly JXTG Nippon Oil’s) Group I plants in Mizushima were heard to be scheduled for turnarounds in the fourth quarter, although further details could not be confirmed with the producers directly. Japanese suppliers typically export large quantities of Group I base oils to several destinations in Northeast and Southeast Asia. Due to the more limited availability from Japan, buyers have booked cargoes from Thailand and other Southeast Asian suppliers.

Given the tight supply of Group I and II cargoes, a major producer with operations in Singapore has nominated price increases, with an effective date of Oct. 1. The producer’s Group I solvent neutral 150 was expected to increase by $20 per metric ton, its SN500 by $70/t and its bright stock by $80/t. The company’s Group II 150 neutral will be raised by $70/t and its 500N by $40/t.

Group III demand has experienced a revival as well, with cargoes moving from the Middle East and South Korea to India, China, the U.S. and other destinations in Asia. Prices for Group III cargoes were higher, but did not move up to the same extent as Group I and II cuts.

There continued to be reports of curtailed availability from a Middle Eastern producer as it was getting ready to shut down its plant for a turnaround, but no confirmation could be obtained.

Spot base oil prices in Asia were have edged up, given increased offers and bids against a tight supply scenario. A major producer’s increase nominations for ex-tank Singapore prices catapulted these assessments to steeper levels.

Ex-tank Singapore assessments for the Group I solvent neutral 150 grade edged up by $10/t to $500/t-$540/t. The SN500 was adjusted up by $20-25/t to $610/t-$650/t. Bright stock moved up by $10/t to $695/t-$730/t, all ex-tank Singapore this week.

Meanwhile, the Group II 150 neutral edged up by $20/t to $530/t-$570/t, and the 500N was hovering at $660/t-$690/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed up by $10/t to $430/t-$460/t, and the SN500 jumped by $30 to $540/t-$580/t. Bright stock was adjusted up by $10/t to $620/t-660/t, FOB Asia.

Group II 150N went up by $20/t to $490/t-$520/t FOB Asia, while the 500N and 600N cuts were adjusted up by $15/t to $570/t-$610/t, FOB Asia.

In the Group III segment, the 4 centiStoke was adjusted up by $10/t to $700-$740/t and the 6 cSt also edged up by $10/t to $720/t-$760/t. The 8 cSt grade was stable at $670-690/t, FOB Asia for fully approved product.

Upstream, crude oil futures slipped on prospects of increased OPEC+ supplies against weakening demand as new lockdowns were being imposed in many countries.

On Thursday, Oct. 1, Brent December futures traded at $42.01 per barrel on the London-based ICE Futures Europe exchange, from $41.43/bbl for November futures on Sept. 24.

Dubai front month crude oil (Platts) financial futures settled at $41.70/bbl on the CME on Sept. 30, from $41.80/bbl on Sept. 23.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com. 

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.