Requirements in certain segments of Asia's base stock market have waned, but generally steady demand is keeping supply somewhat tight.
With uncertainties plaguing the lubricant sector in China, base oil importers are cautiously limiting volumes from neighboring Northeast Asia and other sources.
The continued advance of spot prices for imported product has also dampened buying interest in China, as local prices were heard to be exposed to downward pressure.
Domestic prices were heard to have drooped in recent weeks, further deepening concerns about acquiring imports at higher values that would be difficult to recover later on.
Many Chinese buyers' requirements appeared to be covered by contractual shipments and existing inventories, and appetite for spot cargoes has therefore subsided.
Price pressure was particularly evident on API Group I bright stock, due to muted buying interest from the heavy-duty, marine and industrial segments.
Offers for bright stock from Southeast Asia were heard to be quite attractive and numbers have edged down by between U.S. $10 per metric ton and $20/t week on week, but even at these levels, buying interest remained subdued.
On the other hand, recent and ongoing plant turnarounds in China, together with decreased imports from a regular supplier of Group II oils in June, could tighten availability of a number of base stocks moving forward.
Chinese producer Sinopec Maoming was heard to have delayed the restart of its Group II/III unit in Maoming to July, from an original restart date in May, after completion of a routine maintenance program. The plant can produce 400,000 metric tons per year of base oils, according to LubesnGreases Global Guide to Base Oil Refining.
Also in China, Shandong Hengrunde was expected to take its 200,000 t/y Group II base oils plant off-line in June for a close to two-month long turnaround.
No producer confirmation could be obtained about the turnaround schedule at these plants.
Reports also circulated that Taiwanese producer Formosa Petrochemical Corp. (FPCC) would be reducing the amount of spot material being exported to China during the coming month due to a mechanical problem in an upstream unit, which had caused a drop in base oil output.
FPCC was heard to be prioritizing its contractual obligations and would therefore decrease the volumes available for spot business.
Also starting in June, SK Lubricants' unit in Ulsan, South Korea, was anticipated to be shut down for routine maintenance. SKs unit has capacity to produce 700,000 t/y of Group II and 1.3 million t/y of Group III base oils.
Meanwhile in India, base stock demand continues to be described as steady, despite the onset of the monsoon season. Consumers have been keeping fairly low inventories and are eager to buy small base oil cargoes because they prefer to run operations "hand-to-mouth," a source noted.
Iranian product was still seen as a competitive option for Group I cargoes, compared to material from other suppliers.
Demand in downstream markets is buoyant, the source added, especially following all the economic changes brought about by the administration elected three years ago.
Prices for imported Group I oils in India remained largely unchanged from the previous week, with Group I solvent neutral 150 heard at U.S. $600/t-$620/t CFR India,SN500 at $700/t-$720/t CFR India, and bright stock at $780/t-$800/t CFR India.
Base oil spot prices were slightly mixed in Asia this week, with most ranges remaining unchanged, a couple of numbers moving up, and bright stock edging down as discussions were taking place at lower levels.
On an ex-tank Singapore basis, Group I SN150 was mentioned at $700/t-$720/t, SN500 was steady at $860/t-$880/t, and bright stock was at $960/t-$980/t.
Group II 150 neutral was holding at $710/t-$730/t, and 500N at $920/t-$940/t, again ex-tank Singapore.
On an FOB Asia basis, Group I SN150 was stable at $570/t-$600/t, and SN500 was unchanged at $770/t-$790/t FOB. Bright stock was lower by $20/t at $800/t-$820/t.
Group II base oils were heard at $630/t-$650/t for 150N and the 500N/600N was assessed at $840/t-$860/t, showing a $10/t increase from last week to better reflect current market levels.
In the Group III segment, 4 centiStoke and 6 cSt oils were steady at $770/t-$790/t, while 8 cSt was hovering at $750/t-$770/t, all FOB Asia.
Upstream, crude oil futures plunged nearly 5 percent on Thursday on disappointment that OPEC and other major exporters extended the current production cuts for nine months, but did not agree to implement deeper cuts.
ICE Brent Singapore July futures settled at $51.96 per barrel on May 29, up from $54.08/bbl on May 22.
Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.
LNG Publishing shall not be liable for commercial decisions based on the contents of this report.