The return of Chinese players to the base oils business following the weeklong National Day holiday celebrated last week has yet to yield results in terms of heightened demand, as the market remains fairly quiet.
Despite expectations that buyers would come back to the market in full force after the holiday, sources said it might take some time for the purchasing trend to get into full swing, as consumers were taking time to assess immediate product needs and current price trends.
Even suppliers were not quite ready to step out with fresh offers, and a few have adopted a wait-and-see position until the market situation becomes more defined. A South Korean supplier said it had not discussed offers yet, but anticipated little change from September prices.
Suppliers entertained hopes that orders would improve as downstream lubricant manufacturers ramp up production during the winter oil change season in China, when heavier formulations are required.
At the same time, Chinese consumers were expected to turn to imports to supplement domestic purchases, because supplier inventories were said to be low after the holidays, and a number of producers were just resuming production, following routine turnarounds.
Improved regional supply following several shutdowns in recent months was expected to exert some downward pressure on prices, although there were no signs of this condition having had any effect yet.
In Korea, S-Oil appears to be on track to complete the expansion of its Ultra-S base oil capacity in Onsan. The company plans to increase its API Group II+ and Group III capacity by 3,000 barrels per day to a total of 38,500 barrels per day by the end of October. However, commercial product is not expected to be available until November or December, pending test runs and adjustments, a company source said.
Elsewhere in Asia, activity remained subdued given that many countries were preparing for the Hari Raya Haji and Eid-ul-Adha holidays next week. Japan will also be celebrating a holiday on Oct. 14.
Japanese market participants said that conditions have been unchanged over the last few weeks, and expected requirements to be largely stable in October.
Finished lubricants manufacturers in Japan explained that demand for automotive and machinery applications had been steady, but not particularly strong during the last couple of months. They lamented that there was little chance that domestic sales would improve as a large portion of the business has shifted to China and Southeast Asia in recent years.
A Japanese buyer who secures imports from Korea and Singapore, as well as domestic material, said that there had not been any price fluctuations for October cargoes purchased under contract.
As far as regional pricing was concerned, sources said that they had witnessed few changes so far in October as compared with September, although some cuts have moved up by $5-$10 per ton in recent weeks.
Prices for Group I cuts were assessed at $930-$970/t FOB Asia for SN150, at $1050-$1080/t FOB for SN500 – reflecting a $5/ton increase at the low end of the range – and at $1150-$1190/t FOB for bright stock, also showing a $5/ton hike at the bottom end.
Group II material was heard stable at $1000-$1050/t FOB Northeast Asia for 150N, and at $1100-$1160/t FOB Northeast Asia for 500N.
Group III cuts were mentioned within a price range of $1040-$1080/t FOB Asia for 4 centiStoke and 6 cSt. The 8 cSt cut was assessed at $1020-$1060/t FOB Asia.
On an ex-tank Singapore basis, Group I prices were assessed at close to $1000-$1090/t for SN150; SN500 was heard at $1090-$1190/t, and bright stock was heard at $1190-$1300/t, reflecting a $10/ton hike at the low end of the range. Prices varied according to volumes, producer and contract stipulations.
The pace for exports from Korea appears to have picked up, with a good number of freight inquiries surfacing this week. A 1,000-metric ton cargo was being discussed for Onsan to Tianjin during Oct. 15-20, while a second 1,000-ton lot was also expected to cover the same route around Oct. 18-22. A third cargo of 1,500 tons was being worked on for Ulsan or Yosu to Nantong during Oct. 13-20. About 7,250-7,500 tons comprising four grades were on the market for Yosu to Mumbai during Oct. 20-30, with a 1,500-ton cargo being worked on for Ulsan or Yosu to Sharjah during Oct. 15-30.
Finally, a 3,000-ton parcel was expected to be shipped from Yokkaichi to Tianjin during Nov. 14-18.
Upstream, November ICE Brent Singapore futures were trading at $109.82/bbl at the close of the Asian trading day on Oct. 8, compared with numbers at $107.87/bbl on Oct 1.
Gabriela Wheeler, based in Japan, can be reached directly at Gabriela@LNGpublishing.com.