Although some areas of the market have begun to exhibit a modest build-up of products due to maximum operating rates at most base oil plants and softer consumption of particular grades compared to others, a tighter supply and demand scenario offered stability to base oil prices in Asia. Buyers in other nations were encouraged to obtain products as a result of enhanced activity in the major market of China in order to avoid future supply shortages and perhaps higher pricing.
Base Oil Trends In China
The majority of the demand in China was thought to be well fulfilled by domestic supply levels, but some grades, particularly the heavy-viscosity grades, are frequently short, necessitating imports to fill the gap. Group III supplies are in greater demand as well. In the upcoming weeks, there seemed to be a growing interest in importing goods. Moreover, imports have been occurring since a number of Chinese base oil plants were either shut down for upkeep and inspections or were operating at reduced capacity.
While there has been a slight decline in demand from the automotive industry since Beijing’s government removed incentives for auto purchases, optimistic predictions for manufacturing output levels suggested that demand for lubricants for industrial applications may increase over the coming few months. The New York Times reported on March 2 that factory production in China has increased significantly after the end of lockdowns and reached its best level in more than ten years in February, supporting the nation’s economic recovery.
Up to 1.5 million people may have perished as a result of the sudden change in China’s zero-COVID rules and relaxation of lockdowns, but the easing of restrictions also sparked the nation’s economic recovery. China’s GDP is expected to increase by 5.2% this year, according to the International Monetary Fund, as opposed to 3% in 2022. Experts emphasized that a strong Chinese economy has a ripple effect across the area and boosts other economies as well.
Inquiries to transport 3,000 metric tons of two base oil grades from Ulsan, South Korea, to Rugao surfaced in the middle of March. Towards the middle of March, another 3,000 tons might also be transported from Yeosu or Ulsan to Zhenjiang.
Base Oil Trends In India
India has a tendency to rely more on domestic supplies since they are more affordable and because refiners have an advantage over others by processing cheaper Russian crude oil. In order to minimize the uncertainty associated with spot sales, buyers often decided to purchase more stuff under term contracts. As the light-viscosity grades have been on the snug side, sources from all across the region have become more interested in purchasing them.
While some purchasers were more willing to accept higher offers in order to get all the materials they required, others continued to be hesitant to do so because of sufficient supplies. The rise in Chinese demand, however, stoked worries that local offers would begin to dwindle.
There has been an increase in imports due to the generally stable demand, and numerous cargoes are being considered for shipping to India. In early or mid-March, Daesan and Pyongtaek, South Korea, had about 11,000 tons available for lifting to Bombay. On comparable dates, another 4,000 tons were planned for hoisting at Ulsan or Pyongtaek to Chennai. This month, a shipment from Ulsan to Bombay was quoted at about 15,000 tons. Towards the end of March, a 5,000-ton lot was planned to be transported from Singapore to Mumbai or Hamriyah, United Arab Emirates. This month, a 2,000-ton package was stated as being shipped from Malacca, Malaysia, to Mumbai.
Base Oil Trends In Southeast Asia
A number of agreements have been reached with suppliers from Southeast Asia, and a 2,000-ton shipment from Rayong, Thailand, to Taichung, Taiwan, is expected to be shipped towards the end of March or the beginning of April. A comparable cargo was also proposed for transport from Sri Racha, Thailand, to Chittagong in mid-March. A 3,000-ton lot was also indicated for shipment from Rayong to Chittagong, Bangladesh, in the first half of April. Given recent plant turnarounds in Southeast Asia, the availability of Group I grades was still considered to be limited, but other grades were easier to find.
Base Oil export price In Asia
Except for the Group II 500 neutral, Ex-tank Singapore prices were almost unchanged from the prior week.
The Base Oil SN500 was seen at $1,030/t-$1,070/t, and spot pricing for the Group I Solvent Neutral 150 grade remained stable at $920/t-$950/t. All ex-tank Singapore, Bright Stock was holding at $1,290/t-$1,330/t.
Pricing for the 500N increased by $20/t to $1,020/t-$1,070/t, ex-tank Singapore, while those for the Group II 150 neutral remained unchanged at $970/t-$1,010/t.
Group I SN150 was stable at $790–830/t on a FOB Asia basis, and the SN500 was at $840–880/t. Bright stock prices, FOB Asia, were ranging between $1,070/t and 1,110/t.
The price range for the Group II 150N was $840-$880/t FOB Asia, and the price range for the 500N and 600N cuts was $860-$890/t, FOB Asia.
Prices remained steady in the Group III market as well. The 6 cSt was held at $1,490/t-$1,530/t, and the 4 centiStoke was valued at $1,520-$1,560/t. For a completely certified product, the 8 cSt grade was heard at $1,210-$1,250/t, FOB Asia.
| SN 150 | SN 500 | Base Stocks | N 150 | N 500 | |
|---|---|---|---|---|---|
| Singapore | $920/t-$950/t | $1,030/t-$1,070/t | $1,290/t-$1,330/t | $970/t-$1,010/t | $1,020/t-$1,070/t |
| FOB Asia | $790/t-$830/t | $840–880/t | $1,070/t-1,110/t | $840/t-$880/t | $860/t-$890/t |
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