A string of current and upcoming turnarounds have also contributed to the tightening of supply, not only in Asia, but in the United States, Europe and the Middle East. This has led to a shifting in many trade patterns, with cargoes typically shipped from one country to another within a region now being diverted to other regions, depending on pricing.

Within Asia itself, interest in API Group I base oils increased, and Southeast Asian cargoes that used to move to China, for example, are now finding their way to India and Singapore. Buyers at these destinations have upped their bids to secure these parcels. As a result, Chinese buyers also raised their buying indications, and prices have increased in the whole region. Chinese demand was also anticipated to rise following the Lunar New Year celebrations, which start on Feb. 11.

Base oil cargoes moving to Singapore, particularly from Southeast Asia suppliers, have increased in number, likely due to the extended shutdown of a large refiner’s Group I unit since June 2020. There have not been any updates as to the status of the plant, or whether it was going to be restarted any time soon.

Within the Group I, bright stock was the cut that appeared the most difficult to locate, and end-users of this grade have fewer substitutes at their disposal than for other grades. Many blenders have opted for using Group II cuts, for example, to replace the other hard-to-find Group I cuts, but bright stock offered more challenges. Some buyers have increased their naphthenic base oil orders to use these cuts instead of bright stock whenever possible.

A Japanese Group I producer has shut down its plant for an extended turnaround this month and its export availability has therefore been limited, but further details were unavailable. A Thai producer was also anticipated to shut down operations for a maintenance program in March, although this could not be confirmed with the producer. A Group I unit in India, which was taken off-line for maintenance late last year, was expected to resume production this month, but will be shut down again in March due to a general maintenance program at the refinery which supplies its feedstocks, according to sources.

Group II availability has also tightened, given steady demand against lean inventories and upcoming turnarounds. Planned turnarounds at two South Korean Group II and Group III plants appeared to be on track to start in March. The producers were heard to be meeting term requirements, but were not offering any spot cargoes as they were building inventories to cover term commitments during the outage, sources said.

Consumers have expressed concern at the lack of readily available spot cargoes and were taking as much product under contract as possible, causing a strain on some producers’ inventories as well.

The Group III segment was also snug due to keen buying interest for base oils for automotive applications, as the automotive industry was showing signs of recovery in Asia. The implementation of more stringent emissions controls in some countries was also promoting consumption of Group III grades.

India imported more Group III base oils in the last few months, with an increase in shipments from the Middle East noted. However, it was heard that a Middle East producer reduced its operating rates due to feedstock supply issues, thereby reducing the amount of product moving to India and other Asian ports.

Spot prices in Asia were stable to firm this week, with numbers supported by the prevailing tight conditions and rising crude oil, feedstock and transportation values. Prices for the heavy grades underwent the steeper adjustments given the difficulties buyers were facing in locating these grades. The ranges portrayed below were revised to reflect current discussions and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were adjusted up to reflect bids and offers and recent transactions. The Group I solvent neutral 150 grade was up by $10 per metric ton at $780/t-$820/t. The SN500 was heard up by $30/t to $1,030/t-$1,070/t and bright stock jumped by $40/t to $1,120/t-$1,160/t, all ex-tank Singapore this week.

The Group II 150 neutral was steady at $840/t-$880/t, and the 500N was adjusted up by $50/t to $1,030/t-$1,060/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed up by $20/t at $710/t-$740/t, and the SN500 jumped by $60/t to $1,000/t-$1,040/t. Bright stock surged again by $50/t to $1,080/t-1,120/t, FOB Asia.

Group II 150N was unchanged at $710/t-$750/t FOB Asia, while the 500N and 600N cuts moved up by $20/t to $900/t-$940/t, FOB Asia.

In the Group III segment, the 4 centiStoke was assessed up by $20/t at $940-$980/t and the 6 cSt was also up by $20/t at $960/t-$1,000/t. The 8 cSt grade edged up by $20/t as well to $890-930/t, FOB Asia for fully approved product.

Upstream, crude oil futures continued their rise on Thursday, after trading at one-year highs due to declines in U.S. and Chinese crude stockpiles and signs of tightening global supplies.

On Thursday, February 4, Brent April futures were trading at $58.73 per barrel, from $55.72/bbl for March futures on Jan. 28 on the London-based ICE Futures Europe exchange.

Dubai front month crude oil (Platts) financial futures settled at $57.66/bbl on the CME on Feb. 3, from $54.94/bbl on Jan. 27 (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 gabriela@LubesnGreases.com. 

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.