Asia Base Oil Price Report


Strong feedstock costs and tight supply are supporting stable-to-firm base oil prices in Asia, with suppliers hoping to push increases through on remaining August spot sales and preliminary September business.

Market participants conceded that this could be one of the last chances to achieve increases, as availability is expected to improve in the region once a number of plants resume production, following annual turnarounds.

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Suppliers pointed out that demand is likely to pick up in September, when the summer holidays are over and blenders start to stock up for the busy October-November production season. However, observers also acknowledged that China will be celebrating the autumn holiday Sept. 19-21, and activity tends to slow down ahead and after that. Furthermore, there will also be the National Day holiday in China Oct. 1-7, which could put a damper on September buying appetites.

For the time being, however, sources heard that demand in China has been healthy, particularly for the heavy vis cuts, allowing suppliers to achieve moderate increases around $10 to $20/ton on August shipments. A trader said that South Korean 500N and 600N cargoes could fetch around $1,200/ton CFR China. Imports of Russian Group I high-vis cuts are also sold at a premium, with prices climbing $10 to $50/ton in August over July prices and offers mentioned at $1,030-$1,050/ton FOB, traders said.

Domestic prices in China were also characterized as stable-to-firm, which offered further support to climbing import price indications.

Chinese major Sinopec has resumed or increased production at several of its facilities, although sources said that refiners in China may have to cut back on base oil production in order to produce more transportation fuels. A source said the Chinese government has repeatedly registered a shortfall in diesel production at the end of the summer, and often asks producers to favor output of fuel products over base oils, which would tighten the domestic supply and send buyers in search of imported material.

The lighter vis cuts still seem to be in ample supply in China. Sinopec Shanghai was heard to be offering around 2,000 tons of light vis Group I and II cuts for export this month, although sources said that this is not uncommon, as the company typically has 2,000 to 3,000 tons available for export each month.

In general terms, prices of Group I grades were mentioned at $970-$1000/t FOB Asia for solvent neutral 150, $1030-$1060/t FOB for SN500 and $1130-$1170/t FOB for bright stock.

Group II material was assessed at $990-$1050/t FOB northeast Asia for 150N and at $1080-$1140/t FOB northeast Asia for 500N.

Group III volumes were heard within a price range of $1000-$1060/t FOB Asia for 4 centiStoke, 6 cSt and 8 cSt grades, although one supplier said its prices were much higher because it typically shipped small parcels.

On an ex-tank Singapore basis, Group I prices were heard near $1030-$1100/ton for SN150, $1080-$1180/t for SN500 and $1180-$1290/t for bright stock. Prices varied according to volumes and other contract stipulations.

Asian market players are keeping an eye on production rates at regional facilities, as some producers have recently restarted plants, or are likely to restart in coming weeks.

CPC-Shells light base oils plant remains off-line after completing a routine maintenance program in July because production costs are too high compared to current base oil pricing. The heavy vis production line is running at full rates, according to company sources.

Talk surrounding the current production status of the newly started SK Lubricants Group II plant in Korea continued to be heard. Some market sources indicated that base oil had already been produced, but that the product was off-spec. However, according to a company source, “production at the plant is stabilizing and some adjustments are being made. The source added that there were no quality issues with the product, and the supplier was therefore able to complete exports to China and Southeast Asia this month.

A second Korean producer said that requirements in Asia had been healthy and the supplier was running its plant at full rates to keep up with demand. Part of this demand might be attributed to the inability of other producers to supply enough material because of their tight positions, as evidenced by inquiries from buyers who are not regular customers, the supplier added.

At the same time, blenders in Taiwan said that lubricant requirements remained weak and it was difficult to transfer raw material increases to finished products. Most buyers were limiting their purchases to small volumes, hoping that base oil prices would reverse their upward trend in the next couple of months.

In terms of shipping, a good number of inquiries were being worked on, with several cargoes looking to be moved ex-Korea. A 700-metric ton two-grade cargo was expected to be shipped from Onsan to Singapore for delivery during Sept. 15-16, while a second cargo of 1,800-2,000 tons was likely to cover the same route for arrival around Sept. 16-17. A 2,000-ton two-grade parcel was in the market for Onsan to Geelong for end August/early September lifting. Another 1,500 tons were likely to move from Onsan to Taicang during Aug. 25-28. A second 1,500 ton lot was being worked on for Ulsan-South China for loading Sept. 18-22. A 4,950-ton lot comprised of four grades was still being discussed for Yosu to Mumbai during Aug. 20-25.

A 1,800-2,000-ton cargo was likely to make its way from Hong Kong to Tianjin Sept. 25-29, while 3,000 tons were being considered for Cilacap to Nantong in the second half of August. Finally, a 2,000-ton lot might be shipped from Karachi to Europe during Aug. 23-25.

Upstream, September ICE Brent Singapore futures settled at $109.69/bbl at the close of the Asian trading day on Aug. 13, compared to numbers at $108.25/bbl on Aug. 6.

Gabriela Wheeler, based in Japan, can be reached directly at

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