Asia Base Oil Price Report


Base oil prices in Asia have seen a moderate upward adjustment in recent weeks, particularly for the API Group I and II heavy-vis grades, as availability continues to be snug.

Suppliers agreed that they had been able to push through average increases of $10-20/ton on the heavy-vis spot cargoes, depending on the volumes and the customer, and that higher increases of up to $30/ton have been achieved on smaller volumes.

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Similar increases have also been implemented in the Group III segment, according to producers. A Northeast Asia supplier said that it had sold a small Group III cargo to a Thai customer at an increase of $30/ton over July prices, and that Southeast Asia buyers in general appeared willing to accept higher prices due to the difficulties in locating product.

A Southeast Asia Group III supplier concurred and added that it had been able to attain increases of at least $20/ton for August shipments. Demand has been steady, the supplier added, so much so that the supplier does not expect to shut down its plant for maintenance until December or January when requirements tend to slow down.

Aside from recent and ongoing turnarounds at several base oil facilities in Northeast Asia, sources said IRPC in Thailand was running its Group I plant at reduced rates of 60 percent of normal rates because of mechanical problems. Thai Lube was understood to be running its Group I plant at full rates.

Additionally, sources said that production in China had not yet increased to full rates, and that several facilities had cut back base oil output, possibly because of the need to produce more transportation fuels.

As a result, demand for imports in China continues to be healthy, with particularly robust interest noted for the heavy-vis cuts, leading to increases on spot transactions.

Prices have moved up by $10 to $20/ton in the last few weeks, with South Korean 500N and 600N cargoes offered at $1,200-$1,220/ton CFR China and above, according to sources.

Despite encouraging signs in terms of demand seen in recent weeks, suppliers worried that requirements in China would dwindle in September ahead of the Autumn Festival celebrated Sept. 19-21, and then in October during the National Day holiday Oct. 1-7.

There continued to be mixed opinions on whether the current tight supply/demand balance would start to ease in Asia in September or October. Some market observers expect to see more availability starting in September, and therefore prices may come under downward pressure. Other participants do not foresee an easing of supplies until October, when all plants are expected to resume production following annual turnarounds, and those producers who have already completed their maintenance have been able to build inventories to entertain spot sales.

The lighter grades are more readily available and therefore prices have not been exposed to the same upward pressure as the high-vis cuts, sources said. In fact, CPC-Shell in Taiwan has not restarted its light-vis line, which produces SN 150, after completing its annual maintenance in July because of squeezed margins. The heavy-vis line is running at full rates, the producer said. No specific date for a restart of the light-vis line has been determined yet, but the producer hopes to be able to restart when prices show an improvement. The supplier also mentioned having been able to achieve increases of around $20/ton for its heavy grades in August.

Also in Taiwan, Formosas Group II plant remains off-line since the end of July for a maintenance program, which is expected to be completed in late September. The producers shipments to China have been reduced by 25 percent in August due to the turnaround.

As far as prices are concerned, Group I slates were mentioned at $980-$1020/t FOB Asia for solvent neutral 150, $1040-$1070/t FOB for SN500 and $1140-$1180/t FOB for bright stock.

Group II material was assessed at $1000-$1060/t FOB northeast Asia for 150N and at $1080-$1150/t FOB northeast Asia for 500N.

Group III volumes were heard within a price range of $1010-$1060/t FOB Asia for 4 centiStoke, 6 cSt and 8 cSt grades, although prices for smaller parcels of around 500 tons or less carried a premium of at least $100/ton.

On an ex-tank Singapore basis, Group I prices were heard near $1040-$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.

Meanwhile, in India, import prices remained fairly steady, according to sources, although demand has slowed down because of the monsoons and related difficulties in the transportation of product.

Some August imports have actually been offered at lower prices than in July, a seller said, in order to attract business, but buying interest remains weak.

By contrast, domestic prices have increased recently because of fluctuations in the exchange of the rupee against the dollar, with numbers climbing by $40-50/ton. A local producer increased 150 N by around $40/ton on Aug. 15 and 500 N by about $50/ton on Aug. 15, according to sources, but this could not be confirmed.

On the shipping front, activity was subdued during the week because of national holidays in Korea on Aug. 15-16 and in Japan Aug. 12-16. Nevertheless, ship operators were looking to move 3,000 metric tons of base oil from Yokkaichi to Tianjin on Sept. 18-22. A 1,500-ton cargo was expected to be shipped from Ulsan to Hong Kong and Zhuhai also around Sept. 18-22. A 1,400-ton parcel was being discussed for Onsan to Tsurumi on Sept. 6-10.

In Thailand, a 5,000 ton lot was likely to make its way from Sriracha to Chittagong in early Sept., while 1,000 tons were being considered for Sriracha to Ulsan in 1H Sept.

Upstream, October ICE Brent Singapore futures settled at $109.01/bbl at the close of the Asian trading day on Aug. 20, compared to numbers at $109.69/bbl on Aug. 13.

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

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