Asia Base Oil Price Report


A more cautious buyers’ attitude and higher availability levels have resulted in softer market conditions in Asia, with prices reflecting the changing fundamentals. The impact of Hurricane Ida in the United States on Aug. 29 was much less disastrous to base oil production than expected, and therefore did not impact Asian pricing significantly. However, port and terminal outages were likely to affect deliveries of base stock shipments from various sources, including those from Asia, exacerbating ongoing logistical issues.

Unlike the severe base oil plant outages caused by previous weather systems such as Hurricane Harvey in 2017 and by winter storm Uri last February, Ida prompted several U.S Gulf producers to shut down or reduce run rates temporarily, but most facilities were able to ramp up rates or restart production only a few days after the storm. A majority of them did so by utilizing generators, as power supply in the affected areas remained a problem.

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Ports and terminals were impaired by utility outages, and therefore operations were stopped or resumed at reduced rates after the storm. This was likely to cause delivery delays of shipments moving to the U.S. from origins such as South Korea. The Stolthaven terminal near New Orleans, Louisiana, which is a key distribution point for API Group III imports to the U.S. from Asia and the Middle East, declared force majeure as its operations were shut down due to a lack of electric power. The terminal operator said that operations had restarted this week, but at reduced capacity.

Market participants in Asia had braced for the possibility that prolonged output outages in the U.S. would translate into increased demand for base oils from other regions and accompanying higher prices. However, it appears that the main factors impacting Asia prices this week were regional, rather than related to the storm in the U.S.

Demand in Asia has slowed down due to seasonal patterns and pandemic-related restrictions. While some countries such as Indonesia–which is a key consumer of lubricants–have eased restrictions as infection levels have dropped markedly since peaking in mid-July, other countries were still feeling the effects of the spread of the Delta variant. Restrictions have started to be lifted in many countries this month, but sluggish vaccine rollouts remained a major issue. Many countries in Asia were still facing the possibility of crippling health crises. In some nations, like South Korea, the number of COVID cases had gone down a couple of weeks ago, but were once again surging.

Manufacturing rates in China and Southeast Asia have dropped over the last couple of months due to plant shutdowns caused by reduced staff, and this has impacted demand for industrial lubricants. According to media reports, China’s manufacturing purchasing managers’ index fell to an 18-month low in August as the country saw a spike in infections that prompted a tightening of restrictions and closing of ports. This brought about port congestion and a lack of containers and vessel space. Limitations on the population’s mobility have also dampened demand for aviation, automotive and motorcycle oils.

At the same time that base oil and lubricant consumption embarked on a downward trend, supply of base oils started to improve in Asia with the resumption of production at several Southeast Asian, Japanese, South Korean, Indian and Taiwanese base stock plants, and the increased supply exerted downward pressure on pricing.

While some segments of the market, such as the Group II and Group III sectors were still showing some tightness, the Group I segment displayed more plentiful supply, and spot prices, which had skyrocketed to historical highs in the first half of the year, have shown precipitous drops over the last few weeks.

Demand in India remained fairly healthy, and was expected to pick up the pace as lubricant and finished product producers prepared inventories for heightened demand during the last few months of the year as it is a season of festivals and celebrations, and the monsoon was largely over. Several light-grade cargoes were expected to arrive from the U.S., South Korea, Taiwan and the Middle East over the coming weeks.

China, another key market, has shown lackluster interest in imports, as consumers preferred to acquire product from local suppliers whenever possible. Chinese plants were generally running well and in fact, were producing some surplus volumes, which have been offered up for export. This represents a change in trading patterns as China had up until recently been a net importer of base oils. With more export cargoes becoming available, suppliers in the region were concerned that their cargoes could be displaced by Chinese offers, as prices were expected to be quite competitive. So far, most of the Chinese parcels have moved to Southeast Asia, according to sources.

As mentioned above, supply and demand fundamentals were causing fluctuations in spot pricing within Asia, with numbers assessed as stable to lower this week. 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 have slipped on a key supplier’s downward adjustments and mounting supply. The Group I solvent neutral 150 grade was down by $10/t at $850/t-$880/t, and the SN500 dropped by $30/t to $1,180/t-$1,220/t. Bright stock was down by $30/t as well at $1,620/t-$1,660/t, all ex-tank Singapore.

Prices for the Group II 150 neutral fell by $20/t to $850/t-$890/t, and the 500N also moved down by $20/t to $1,340/t-$1,380/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was adjusted down by $20/t to $700/t-$740/t, but the SN500 fell by $100/t to $1,000/t-$1,040/t. Bright stock fell by $50/t to $1,430/t-1,470/t, FOB Asia.

Group II 150N was assessed down by $20/t to $710/t-$750/t FOB Asia, and the 500N and 600N cuts were also down by $20/t at $1,160/t-$1,200/t, FOB Asia.

In the Group III segment, prices were stable, supported by robust demand and tight conditions. The 4 centiStoke was hovering at $1,420-$1,460/t and the 6 cSt was steady at $1,430/t-$1,470/t. The 8 cSt grade was unchanged at $1,360-1,400/t, FOB Asia for fully approved product.

Upstream, crude oil futures edged up in mid-morning Asia trade on Thursday as oil supply issues persisted following Hurricane Ida. After more than a week of the storm’s making landfall, 77% of U.S. Gulf of Mexico output remained shut, according to the Bureau of Safety and Environmental Enforcement.

On Sept. 9, Brent November futures were trading at $73.13 per barrel on the London-based ICE Futures Europe exchange, from $72.06/bbl on Sep. 2

Dubai front month crude oil (Platts) financial futures for October settled at $69.86/bbl on the CME on Sep. 8, from $69.25/bbl on Sep. 1 (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.

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