Asia Base Oil Price Report


Dark clouds continue to gather over the Asian base oils market as more regional product becomes available, contributing to a global supply/demand imbalance that threatens to push prices down further.

While no full-blown tempest has developed, some prices have slowly drizzled down to lower levels as compared with business concluded in September and early October. Suppliers have lowered offers in a drive to reduce mounting inventories, but the lower prices have failed to stimulate demand, with buyers largely tailoring their purchase volumes to fulfill immediate requirements.

Some suppliers have not communicated their November offer prices yet. In Taiwan, for example, a producer is expected to announce its offers on Oct. 31, and participants said that a number of other suppliers were waiting to see what their competitors were planning to do before stepping out with their own price indications.

Buyers in Taiwan were hoping to get some relief from lower base stock prices, as demand for finished products from the automotive and industrial segments has been weak, mostly because of the economic uncertainties affecting the country.

Taiwanese producer Formosa is running its plant at normal rates and building inventories, following a turnaround in August and September, and is currently able to fulfill most domestic requirements while offering some spot cargoes into China, according to sources.

Additional capacity in Asia is expected to be introduced to the supply system from expansion projects or new start-ups, such as the revamping of the S-Oil base oil plant in Onsan, which should bring an additional 3,000 barrels per day (approximately 150,000 tons per year) of API Group II+ and Group III to the market in November.

In China, Qingyan Group is expected to have 300,000 t/y of Group II base oils available from its new plant in Shandong in November as well, while Panjin Northern Asphalt was expected to start up a new 400,000 t/y Group II plant at Panjin the same month, according to local sources.

Also in China, Sinopec Shanghai Gaoqiao was heard to be running its 700,000 t/y Group I/II plant in Shanghai at normal rates, following a brief unexpected shutdown in late September-early October triggered by a power outage.

Meanwhile, a Southeast Asian supplier said that demand had been a mixed bag, with some segments still going strong, particularly in China, and orders from smaller buyers having dwindled, likely in anticipation of a possible slowdown in downstream applications.

The supplier acknowledged that prices have been edging down on the back of improved supply and competitive moves by a large refiner.

Other sources agreed that prices had dropped by at least $10-$20/ton across the board for spot transactions concluded in the last couple of weeks, and that buyers were pushing for deeper discounts.

Aside from additional material coming into the market from local producers, it was heard that several U.S. cargoes had been sold at competitive prices into India. Prices of Group II 150N of U.S. origin were heard at $980-1020/ton CFR India, while 500N was quoted at $1100-1140/t CFR, although this could not be confirmed with the suppliers. Other deals were heard at $1020-1050/t CFR India for 150N and at $1140-1180/t CFR for 500N.

While these cargoes do not directly impact prices in other countries, the fulfillment of Indian requirements with U.S. product means that regional suppliers, who typically sell to India, have to find alternative homes for their base stocks and offer attractive pricing to entice buyers.

Additionally, there were also lower-priced cargoes of Russian Group I material sold to China in the last few weeks. The suppliers offers for October had been heard at decreases of $10-$25/ton compared with September, as the seller was eager to place product into China on the back of a supply overhang in Europe.

Elsewhere in Asia, some Group I and II cuts have edged down as sellers have agreed to decreases in the realm of $10-$20/ton, while other suppliers were standing firm by their price ideas, resulting in fairly stable pricing for a number of cuts.

Group I cuts were assessed unchanged at $930-$970/t FOB Asia for SN150, at $1050-$1080/t FOB for SN500 and at $1150-$1190/t FOB for bright stock. The high-vis grades were less exposed to downward pressure given tighter availability, sources said.

Group II material was heard to have inched down to $980-$1030/t FOB Asia for 150N, reflecting a $20/t decrease from a week ago, and to $1100-$1150/t FOB Northeast Asia for 500N, showing a $10/t drop at the high end of the range.

Group III cuts were largely stable, with orders said to be subdued. Prices were assessed at $1040-$1080/t FOB Asia for 4 cSt and 6 cSt, with the 8 cSt cut quoted at $1020-$1060/t FOB Asia.

On an ex-tank Singapore basis, Group I prices were said to be assessed at around $990-$1080/t for SN150, reflecting a $10/t downward adjustment; SN500 was heard at $1090-$1190/t, and bright stock was heard within a wide range at $1190-$1290/t, also revealing a $10/t drop at the high end of the spread. Prices varied according to volumes, producer and contract stipulations.

On the shipping front, most action again seemed to focus on inquiries to move product ex-Korea, with 3,000 metric tons still being worked on from Ulsan to Taicang during Oct. 29-Nov. 5. An 800-ton parcel was likely to be shipped from Ulsan to Chennai on a prompt basis, while a second 1,000-ton lot was mentioned from the same origin to Zhuhai for Nov. 15-20 lifting. Two separate cargoes comprising two base oil grades each, one for a total of 1,500 tons and the other for 700 tons, were being discussed for Ulsan or Yosu to Merak during Nov. 20-30. A large 7,250-ton lot made up of four grades was still on the market for Yosu to Mumbai for prompt to early November shipment.

Rounding up this group, a 1,000-ton parcel was likely to be shipped from Onsan to Tianjin during Nov. 5-10, for delivery during Nov. 8-13.

Upstream, December ICE Brent Singapore futures were trading at $109.34/bbl at the close of the Asian trading day on Oct. 29, compared with numbers at $109.87/bbl for November futures on Oct 22.

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

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