Asia Base Oil Price Report


Activity in the base oils market remained subdued as participants assessed product needs for the next few weeks, taking into consideration uncertainties such as the possibility that demand from downstream lubricant segments would decline due to the coronavirus outbreak.

With a number of manufacturing plants suspending operations in China, base oils requirements were likely to be impacted.

Car manufacturers Toyota and Ford had already shut down locations across China last week, and a number of manufacturers outside of that country that rely on Chinese parts and products have also started to be affected by the disruptions to the supply chain.

For example, Hyundai suspended production lines at its car factories in South Korea this week, according to The New York Times, while Reuters reported that Jaguar and Land Rover parent Tata Motors expected the outbreak to hamper production in China and hit profits. Tesla was ordered to shut down its car factory in Shanghai and was also evaluating whether the supply chain for cars built in its California plant would be affected.

Travel to and from China has been severely restricted, and numerous international companies have cancelled all business trips to China, including U.S. oil refiner Phillips 66, a company statement said.

Base oil volumes moving to China in January had already decreased compared to the previous months due to the start of the Lunar New Year holidays at the end of the month, and were expected to remain at reduced levels in February.

Regular API Group II shipments from Taiwanese producer Formosa Petrochemical had been adjusted down significantly in January and were not likely to pick up in February, although the reduced levels were thought to be mostly linked to reduced output levels at the producer’s plant in Mailiao during the last few weeks of 2019.

United Arab Emirates producer Adnoc was heard to have shipped two Group III cargoes to China, one that was lifted last month and one that was scheduled for February loading, and it was unclear whether further cargoes had been booked.

Given the likelihood of reduced demand from downstream lubricant blenders, Chinese base oil plants were heard to be dialing back production rates. A couple of plants that had been taken offline for maintenance recently were not anticipated to be restarted in the short term.

A maintenance turnaround at a Group II and III plant in South Korea has helped reduce oversupply of these cuts in the region. It was heard that some European product was on its way to India to cover for the possible shortfall of Korean product.

India has also been the destination for large Group I and II shipments out of the Middle East in recent weeks, particularly as the possibility of importing Group I cargoes from Iran has evaporated due to international sanctions.

Not all news related to the coronavirus were negative. The government in China surprisingly announced that it would halve tariffs on a range of U.S. goods as of Feb. 14, ostensibly to promote the health and stability of China-U.S. trade. Products worth about $75 billion annually to the U.S. were heard to be included. Participants hoped that this would help offset some of the adverse effects the virus has had on the Chinese economy.

The news helped stall the free fall of crude oil prices, with oil futures and stock markets moving higher on Thursday. The OPEC and its allied members, who are meeting in Vienna this week, were also expected to extend the curb on oil production to stall the slide of oil prices. Reports about a potential drug to treat the virus also offered support.

On Thursday, Feb. 6, Brent April futures were trading at $55.09 per barrel on the London-based ICE Futures Europe exchange, compared to $58.34/bbl on Jan. 30.

Base oil spot prices were steady-to-soft during the week, with some prices succumbing to downward pressure due to the ample availability of product, lackluster demand, and the recent decline in crude oil and feedstock values.

Ex-tank Singapore Group I prices for the solvent neutral 150 grade was down by $20/t at at $660/t-$680/t, and the SN500 was also down by $20/t at $710/t-$730/t. Bright stock was steady at $820/t-$840/t, all ex-tank Singapore.

The Group II 150 neutral and 500N were holding at $720/t-$740/t and $730/t-$750/t, respectively, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was notionally assessed down by $10 per metric ton to $530/t-$560/t to reflect the downward trend, and the SN500 grade was also adjusted down by $10/t to $540/t-$550/t. Bright stock was also lower by $10/t at $690/t-$710/t, FOB Asia.

Group II 150N was revised down by $10/t to $560/t-$580/t FOB Asia, while the 500N and 600N cuts were also down by $10/t at $580/t-$600/t, FOB Asia.

In the Group III segment, the 4 centiStoke and 6 cSt were assessed at $760-$790/t and $770/t-$805/t, respectively, reflecting a $10-20/t downward adjustment. The 8 cSt grade was heard at $710-730/t, FOB Asia for fully approved product, also showing a $10/t decrease.

Gabriela Wheeler can be reached directly at

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

Historic and current base oil pricing data are available for purchase inExcel format.

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