Further increases have emerged in the market on the back of firmer crude oil values, but some segments continue to be weighed down by oversupply, stifling many of these initiatives.
Despite efforts by a majority of producers to implement price hikes in order to improve margins as crude oil and feedstocks keep edging up, ample availability of certain grades, such as the API Group III cuts, are undermining some of the upward movements.
Group III cargoes from the new Abu Dhabi National Oil Company (Adnoc) plant in the Middle East continue to be shipped into India and China, displacing material from other regional producers, as Middle Eastern prices are very competitive. As a result, other suppliers have had to adjust prices down as well.
On the other hand, prices for Group I and II oils are getting support from a tightening scenario because some refiners have diverted their feedstock streams towards other products such as heating oil/kerosene and fuel oil. With winter temperatures dropping in the region, demand for heating oil has climbed and so have prices, sources said.
Base oil producers have lifted spot some offers by between U.S. $5 per metric ton and $10/t and have seen interest from those buyers who are concerned that crude oil prices may keep climbing and that base oils will eventually rise as well.
Some end-users are holding off on purchases, trying to consume existing inventories to avoid yearend tax implications. However, some of them are slowly turning their attention to January price discussions.
Others are actively seeking cargoes, as some segments of the spot market appear to be drying up and buyers stocks were also deemed low.
Such is the case of Group I bright stock in China, which was heard to be snug and prices are therefore inching up. Offers were heard to have climbed $10/t for late December and early January cargoes and were hovering at around $790/t-$800/t FOB Asia.
Likewise, Group I solvent neutral 150 and SN500 prices in India were understood to be on the rise, given more limited availability of domestic product, while offers for Middle Eastern material have edged up, driven by higher . Offers of Iranian material were heard at $595/t-$600/t FOB Iran for SN500, showing a $5/t-$10/t increase from a week ago.
In Taiwan, it was the list prices of local Group II producer Formosa Petrochemical that underwent upward revisions on steeper feedstock costs. This was the second increase of the producers pricing in the span of a month, according to sources.
Formosa lifted its Group II 70 neutral by New Taiwan Dollars .51 cents per liter on Dec. 14, the second increase this month. The first hike was communicated at the beginning of Dec.
The producers 150N cut was heard to have climbed NT .71 cents/l, while the 500N grade underwent a slightly heftier increase of NT .96 cents/l this time.
While sellers were working hard on finalizing deals before the end of the year, many buyers were still assessing purchasing needs and therefore were reluctant to commit to business. The number of concluded transactions was limited and prices were therefore largely assessed stable to slightly firmer this week.
On an ex-tank Singapore basis, API Group I solvent neutral 150 was adjusted up by $5/t to $590/t-$610/t, while the SN500 and bright stock underwent similar revisions to $670/t-$695/t and $915/t-$935/t, respectively.
The Group II 150 neutral was assessed at $590/t-$610/t, and 500N at $765/t-$785/t, ex-tank Singapore, also reflecting a $5/t upward revision.
On an FOB Asia basis, Group I SN150 was holding at $470/t-$490/t, while the SN500 was heard at $575/t-$585/t FOB, showing a $5/t upward revision. Bright stock was also up by $10/t at the lower end of the range, to $780/t-$790/t FOB.
Within the Group II category, 150N was up by $5/t at the top end of the spread, to $480/t-$500/t, while 500N/600N was up by $5/t at $640/t-$660/t, all FOB Asia.
In the Group III segment, the 4 centiStoke and 6 cSt oils were assessed slightly down at $725/t-$755/t, while the 8 cSt grade was heard steady at $650/t-$670/t, all FOB Asia.
Upstream, crude oil futures have undergone some fluctuations, spiking one day on news that the OPEC and non-OPEC members had reached an agreement to curb production next year, and falling the next on renewed concerns about an oil glut sparked by rising U.S. crude inventories and doubts that all the countries would stick to their production quotas.
ICE Brent Singapore February futures were trading at U.S. $54.98 per barrel on Dec. 20, compared to $56.93/bbl on Dec. 8.
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.