Despite the absence of several players attending the ICIS Conference in Singapore during the early part of the week, base oil discussions remained steady as a number of buyers were eager to secure cargoes in a tightening market.
While it was no news that availability of the heavy-viscosity grades in the API Group I and II segments has been snug, it appears that the low-viscosity cuts have also tightened as producers have made efforts to balance out inventories.
Some producers have resorted to trimming production rates to manage stock levels, with others bundling up sales of the heavy-vis cuts with low-vis cargoes in order to move product out.
As a result, availability of the light-vis cuts has also declined, and suppliers have been able to achieve moderate increases on both list and spot sales of the heavy-vis, as well as of their lighter counterparts.
In Southeast Asia, a major refiner raised the list price of its Group I and II heavy-vis cuts (including bright stock) by U.S. $20-$30 per metric ton on June 12, and also increased the price of its low-vis Group II 150 neutral cut by $10/t. The only product that did not undergo any revisions was the refiner's Group I SN150 oil, according to sources. There was no producer confirmation about these adjustments.
Availability of Group I oils has been particularly limited in Asia due to the recent and ongoing turnarounds at a few regional base oil facilities.
Japanese producer JX Nippon has undertaken an extended turnaround of about five months at its Mizushima facilities since April, which has reduced the availability of material both for the domestic market, as well as for export, market sources said. Only one of JX Nippon's base oil plants is off-line; the unit can produce 250,000 metric tons per year of Group I base oils.
Idemitsu Kosan also reported having started a turnaround at its Chiba facilities in April, and expects to resume production in late June. The producer shuts down for maintenance every two years, and had built inventories to cover most of its contractual requirements during the turnaround. Idemitsu Kosan can produce 123,000 t/y of Group I, 138,000 t/y of Group II and 44,000 t/y of Group III oils at its Chiba facilities.
Also in Japan, Cosmo Oil was expected to shut down its 200,000 t/y Group I base oils unit at Yokkaichi for a one-month turnaround from early June.
Despite buying interest for spot cargoes of both the low-vis cuts as well as the heavy-vis grades, there were not many transactions finalized as some suppliers reported sold-out conditions, or preferred to wait to receive higher bids for their spot cargoes.
On an ex-tank Singapore basis, Group I SN150 prices were mentioned at $660/t-$680/t, SN500 was heard slightly up by $10/t at $770/t-$790/t, and bright stock was also higher by $10/t at $1,110/t-$1,130/t.
On an FOB Asia basis, Group I SN150 edged up $10/t on tightening conditions to $560/t-$590/t, and SN500 was revised up by $20/t to $680/t-$700/t FOB. Bright stock prices were hovering at $1,080/t-$1,100/t FOB.
Within the Group II category, prices for 150N inched up by $10/t at the lower end of the prevailing range at $580/t-$610/t FOB Asia, and prices for 500N were up by $10 at the low end of the range at $720/t-$740/t FOB Asia.
In the Group III segment, 4 centiStoke and 6 cSt oils underwent few fluctuations and were assessed at $920/t-$940/t FOB Asia, while the 8 cSt grade was revised down to $700/t-$720/t FOB Asia to better reflect current price indications.
On the shipping front, interest to move product from South Korea to several different destinations continues to be strong. A 2,000-metric ton cargo was discussed for Onsan to Antwerp, Belgium, for prompt shipment. A second 2,000-ton lot of two base oil grades was on the table for Yeosu to Quanzhou, China, for June 18-22 lifting. A 4,000-ton of three grades was expected to be shipped from Yeosu to Nantong, China, between June 23-27.
A 4,000-5,000-ton cargo, also of three grades, was being worked on for Yeosu to Mumbai, India, for June 20-25 shipment. A 5,000-ton parcel of two grades was expected to be moved from Yeosu to Beihai, China, on June 25-30.
A 3,000-ton cargo was quoted for Yeosu to Ennore, India, for June 15-25 shipment. A 3,850-ton lot made up of five grades plus 2,700 tons also emerged for Yeosu to Mumbai and Ennore, India, for June 15-25 lifting.
A 3,000-ton parcel was expected to be shipped from Yeosu to Mesaieed on July 1-5. A 500-ton lot was being discussed for Yeosu to Taichung, Taiwan, for July 1-5 lifting.
A 3,900-ton cargo was quoted for Yeosu to Merak and Tanjung Priok, Indonesia, between July 1-5.
Lastly, a 3,200-ton parcel of two grades was heard for Yeosu to Koh Si Chang, Thailand, for June 25-30 loading and a 4,700-ton lot was expected to cover the same route, but for July 25-30 lifting.
Upstream, July ICE Brent Singapore futures were trading at $63.61 per barrel in afternoon trading on June 15, compared to $62.94 per barrel on June 8.
Gabriela Wheeler can be reached directly atgabriela@LubesnGreases.com