Asia Base Oil Price Report


The alarming spread of the Delta strain of the coronavirus was a variable that base oil market participants have started to pay attention to, as it caused a slowdown in key economies such as China’s. Lockdowns and travel restrictions have also been imposed in several Asian countries, and this might once again affect the population’s mobility, along with fuels and lubricants demand.

The resurgence of coronavirus cases in China, driven by the Delta variant, has prompted the government to impose domestic travel bans and close scrutiny of those who have traveled from one city to another. Some airports have cancelled all flights. Widespread lockdowns like the ones seen last year have not been implemented because they were said to be too costly, but may become necessary if the outbreak cannot be controlled, media outlets reported. Meanwhile, China’s factory activity in July grew at its slowest pace since February 2020 as manufacturers were dealing with new challenges not only related to the pandemic, but to higher raw material prices and extreme weather, reported.

Get alerts when new Sustainability Blog articles are available.


In Japan, the action-packed Summer Olympic Games continued to take place in Tokyo this week, despite the initial opposition to the event by a large part of the country’s population due to concerns about a possible rise in coronavirus cases and a sluggish national vaccination campaign. The Japanese government imposed strict coronavirus controls for the Olympics participants and banned spectators. On August 5, authorities extended a state of emergency in Tokyo and other prefectures and imposed limits on domestic travel during the busy summer holiday month.

Since the start of the pandemic in early 2020, Asian refineries that produce aviation fuel have been particularly impacted by the slump in consumption from commercial airlines, which cut back their flight schedule in response to travel bans, border restrictions and a lack of passengers. While some travel has resumed, the rise in infections may cause another decline in airline activity. An increase in flights used for cargo transportation during the pandemic has made up for only a small part of the drop in tourist and business travel. The lackluster airline traffic will likely discourage kerosene output and affect operating rates at regional refineries, according to analysts.

While suppliers still perceived base oil demand as healthy, there were segments where requirements have started to weaken due to seasonal patterns and dampened activity levels. This coincided with improved supply levels in the region, as plants that underwent turnarounds or suffered unexpected outages have been restarted.

This situation applied to the API Group I segment in particular, as the resumption of output at Japanese and Southeast Asian plants contributed to mounting supply of Group I grades within the region. China has also brought some export volumes to the market, with offers even heard to have been made to distant destinations such a South America. Given improved supply and slowing demand for Group I base oils from manufacturing operations, downward price pressure has been more evident in this segment.

The Group II category was still seeing its share of supply woes as demand remained robust and one of the regional plants was undergoing an extended turnaround. Formosa Petrochemical’s plant in Mailiao, Taiwan, which was heard to have shut down for maintenance in early July was not expected to restart until mid-August. The plant has capacity to produce 600,000 metric tons per year of API Group II grades (according to Lubes’n’Greases’ Guide to Global Base Oil Refining) and typically supplies base oils not only to the domestic market, but also to China, India and other destinations in the region.

A number of shipments of very light grades were heard to have been concluded from South Korea to the U.S. for onward shipment to Mexico.

Availability in the Group III segment remained snug, with regional demand described as steady and a healthy flow of product moving to the U.S., where requirements have shot up in recent months and prices were at a premium compared to other markets such as Europe.

South Korean exports of Group III base stocks to the U.S. have flourished over the last couple of months, after languishing during most of 2020 due to pandemic-related weak demand, and during the first half of 2021 given a lack of availability caused by turnarounds at South Korean plants.

There have been several shipments scheduled from South Korea to India. While demand in India has been dampened by a rise in coronavirus infections and economic uncertainties, lubricant production was said to have maintained fairly steady levels. However, base oil buyers have also turned more prudent in terms of volumes and prices, as softer values have started to emerge and further downward adjustments were possible. Consumers were therefore trying to limit orders to contract volumes and keeping lean inventories.

Spot prices for Group I and Group II grades were steady to softer week on week, while Group III values were firm. The ranges portrayed below have been revised to reflect discussions, deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were lower as supply improved and demand slowed down given coronavirus-related restrictions in a number of Southeast Asian countries. The Group I solvent neutral 150 grade was down by $10/t at $920/t-$950/t, and the SN500 also edged down by $10/t to $1,460/t-$1,500/t. Bright stock was also lower by $10/t at $1,810/t-$1,850/t, all ex-tank Singapore.

Prices for the Group II 150 neutral decreased by $10/t to $930/t-$970/t, and the 500N also edged down by $10/t to $1,420/t-$1,460/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 edged down by $10/t to $800/t-$840/t, and the SN500 fell by $20/t to $1,400/t-$1,440/t. Bright stock edged down by $10/t to $1,700/t-1,740/t, FOB Asia.

Group II 150N was unchanged at $820/t-$860/t FOB Asia, and the 500N and 600N cuts were also steady at $1,290/t-$1,330/t, FOB Asia.

In the Group III segment, prices were largely stable. The 4 centiStoke was holding at $1,420-$1,460/t and the 6 cSt was assessed at $1,430/t-$1,470/t. The 8 cSt grade was hovering at $1,360-1,400/t, FOB Asia for fully approved product.

Sliding crude oil values were also expected to take some of the pressure off base oil prices. Crude oil futures fell for a third day in a row to a two-week low on Wednesday on a surprise build in U.S. crude stockpiles and worries that the spread of the coronavirus Delta variant would dampen global energy demand. Prices fell despite reports of increased Mideast geopolitical tensions, which may impact oil production.

On Aug. 5, Brent October futures were trading at $70.87 per barrel on the London-based ICE Futures Europe exchange, from $74.97/bbl for September futures on July 29.

Dubai front month crude oil (Platts) financial futures for August settled at $67.74/bbl on the CME on Aug. 4, from $69.65/bbl on July 21 (CME note: Settlement prices on instruments without open interest or volume are provided for web users only and are not based on market activity.)

Gabriela Wheeler can be reached directly at 

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

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

Related Topics

Base Oil Pricing Report    Base Stocks    Market Topics    Other