Asia Base Oil Price Report


Climbing crude oil and feedstock prices continue to place upward pressure on base oil prices in Asia, with offers moving up slightly for most grades during the first few days of September.

Despite the steeper selling indications, transactions appear to be taking place at similar levels to those seen in August, as the higher prices have not been established yet, sources said.

A buyer in China said that suppliers had made overtures towards achieving increases between $10 and $20/ton for September cargoes, but that there was no evidence that the increases had gone through. Another consumer in Taiwan said that offers for the high-viscosity grades, which are said to be in tight supply, had edged up by $20-$30/ton, while selling ideas for the lighter cuts have inched up by $5/ton compared to August numbers.

Chinese buyers are resisting the higher offers because there is uncertainty in the downstream markets, as it is not clear whether demand will be healthy moving forward, and whether manufacturers will be able to recoup the amount of the hikes from the end-user segments. Customers are concerned about cost and whether they can pass it down to their own customers, a base oil trader said. With the approach of the autumn holidays in China Sept. 19-21 and the National Day holidays in early October, industrial activity was anticipated to slow down and demand for raw materials would be negatively affected, sources added.

A trader agreed that there were still uncertainties plaguing the market in Asia and that demand from the downstream applications had been steady, but far from stellar in August. Buyers are limiting their purchases to smaller cargoes and are not building inventories, and the only factor that may be pushing prices up is the rise in crude oil prices, the source concluded.

The supply/demand balance could also change as the base stock plants that have been undergoing maintenance will be coming back on stream by the end of September, resulting in increased availability. This could actually drive prices down, offsetting the pressure from the feedstock side, sources said.

Discussions for September shipments are ongoing, and more transactions are expected to be finalized in the coming days. A seller said there had been some inquiries for spot cargoes from buyers in Southeast Asia, but buying ideas seemed to be at the same price levels as in August. Sources said that most API Group I and II grades were readily available in the region, and that production in Indonesia and Thailand was running well. The Group III cuts were perceived as slightly long, according to buyers.

Despite the current upward pressure, base oil prices were generally said to be stable, with Group I cuts 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 cuts were heard within a price range of $1010-$1060/t FOB Asia for 4 centiStoke, 6 cSt and 8 cSt grades.

On an ex-tank Singapore basis, Group I prices were pegged 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.

On the shipping front, activity appears to have lost steam for the time being, with only a couple of fresh inquiries heard this week. A 2,000-metric ton base oil cargo was being discussed to cover Hamriyah to Singapore on a prompt basis. A second 2,000-ton parcel was expected to be shipped from Yosu to Tianjin during Sept. 1-15.

In other market news, Chinas National Development and Reform Commission increased the price of fuel for the fifth time this year, with gasoline being lifted by 235 yuan per ton (or approximately $38.11/ton) and diesel by 225 yuan/ton ($36.49/ton) on Aug. 31 because of firmer crude values.

Upstream, October ICE Brent Singapore futures were trading at $114.55/bbl at the close of the Asian trading day on Sept. 3, compared to numbers at $110.97/bbl on Aug. 27.

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

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