Weekly Asia Base Oil Report: 03-09 June 2023

Spot base oil prices in Asia remained under pressure due to weaker demand and ample supplies, and the possibility of planned turnarounds may soon limit spot availability. As prices continued to fall, buyers were wary of amassing huge stocks, while suppliers were open to making small price adjustments. Due to the slow growth of demand in other areas and the necessity to control excess inventories, export transactions were difficult to complete. Geopolitical tensions, fluctuating crude oil prices, persistent economic uncertainty, and other factors all contributed to further clouding the market outlook. Brent oil prices are currently fluctuating between $70 and $75 per barrel, a considerable drop from the average price of $100.93 per barrel recorded in the previous year.

Downward Movement in Oil Futures

Oil futures experienced a downward trajectory on Thursday, although they managed to recover partially from earlier losses of around $3 per barrel. The decline in prices came after both the United States and Iran denied a report suggesting a nearing nuclear deal that would result in the lifting of sanctions on Iranian oil exports. Earlier in the week, oil prices had received a boost due to market expectations of additional production cuts by OPEC+ member countries.

On the ICE Futures Europe platform in London, Brent August futures were trading at $75.51 per barrel as of June 8; this is a modest gain from $72.87 per barrel on June 1. Platts’ financial futures for Dubai front-month crude oil for July finished at $75.90 per barrel on June 7 on the CME, up from $70.77 per barrel on May 31.

Order : recycle base oil

Market participants continued to keep a close eye on supply conditions in addition to crude oil and feedstock pricing. Additional volumes should become more readily available as demand slows, while planned turnarounds may limit some of this supply.

Base Oil Trends In Southeast Asia

In Southeast Asia, a significant source of API Group I material, reduced availability of Group I base stocks was observed due to recent maintenance and unplanned outages at certain Indonesian plants. Furthermore, a major facility in Singapore underwent maintenance of its base oil trains from late April to early June, primarily impacting Group II supply. However, it was expected that the producer would resume full operations this month. In terms of regional shipments, discussions were underway for a potential 2,000-metric ton cargo to be shipped from Malacca, Malaysia, to Map Tha Phut, Thailand, in late June or early July.

Base Oil Trends In South Korea

In Northeast Asia, a South Korean producer of Group II and Group III base oils had initiated an extended turnaround in late May, which is scheduled to continue until July. As a result, spot shipments to regular outlets in Europe and the Americas have been limited.

In spite of reduced supply from the producer, there were ongoing discussions regarding several cargoes for export from South Korea. One of the shipments being considered was a 2,000-metric ton parcel from Onsan to Merak and Ciwandan, Indonesia, scheduled for late June. Additionally, approximately 3,700 tons were expected to be shipped from Ulsan and/or Yeosu to Batangas and Manila, Philippines, in early July. Another shipment under consideration ranged between 8,500 tons and 9,500 tons, originating from Daesan and Ulsan and destined for Singapore and Port Klang, Malaysia, during the first week of July.

Order: rubber processing oil

Base Oil Trends In Japan

Meanwhile, a Japanese refiner had reportedly commenced a two-month turnaround at its refinery in late May, which was anticipated to impact Group I base oil output and limit availability from the producer. Another Japanese producer had already initiated a turnaround in April and was expected to conclude it in June, affecting Group II output.

Base Oil Trends In Taiwan

Refinery maintenance is underway for the sole Taiwanese Group II producer, expected to be completed in June and July. However, the impact on base oil output is anticipated to be minimal. The producer has also scheduled a turnaround at its base oils plant in October, prompting inventory buildup prior to the shutdown, which in turn limits spot sales. Currently, the supplier is actively shipping significant quantities of base oils to China and other destinations within Asia.

Base Oil Trends In China

In the Chinese market, a major refiner is still in the midst of a partial shutdown of its Group I and Group II facilities. However, this has not had a significant impact on domestic supplies. With a seasonal decline in demand and sufficient availability of domestic products, buying interest for base oils, especially imported varieties, has dampened. Typically, China imports large volumes of heavy grades due to higher production of light grades domestically. However, weakened demand, economic uncertainties, and a depreciating local currency against the dollar have resulted in reduced import activities. Consumers are increasingly relying on domestic output and adjusting their price expectations accordingly.

While some suppliers have backed down from their offers in the face of customer pressure, some sellers have bowed to lower modifications in an effort to move their product and control inventory levels. Heavy-grade base oils are in plentiful supply as a result of China’s slower than expected recovery from severe COVID-related limitations.

Base Oil Trends In India

In another important market, India, the onset of the monsoon season has made buyers more cautious about their procurement plans in the coming weeks. With adverse weather conditions leading to transportation and logistical challenges, buyers have been proactive in building up inventories ahead of the heavy rains. Indian consumers have expressed confidence in securing an adequate supply of base oils, either from domestic producers ramping up production rates after completing turnarounds this quarter, or from importers who have recently conducted significant business, including multiple shipments from the United States. As a result, buyers’ price expectations have been adjusted downward.

As domestic demand in the U.S. remained unexpectedly subdued, exporters have taken advantage of the situation by shipping multiple Group II cargoes overseas. These export transactions have not only helped balance supply and demand within the country but also prompted domestic suppliers to adjust their prices downward in an attempt to stimulate sales. Furthermore, ongoing maintenance activities at a Group II facility have aided suppliers in managing their growing inventories.

Significant shipments are anticipated, including approximately 18,000 metric tons scheduled for transport from the U.S. Gulf to West Coast India in the first half of June. Additionally, around 4,200 tons are being considered for shipment from Ulsan, South Korea, to Mumbai and Jawaharlal Nehru Port Trust in mid-July. Late June is expected to see the movement of 3,000 to 5,000 tons from Pyongtaek and Daesan, South Korea, to West Coast India, with a similar cargo mentioned for earlier dates. Moreover, discussions are underway for a 3,000-ton cargo to be shipped from Thailand to West Coast India in the second half of June. Several other concluded cargoes from previous weeks are also en route to India.

Base Oil price In Asia

Spot base oil prices in Asia experienced a general softening trend this week due to growing supply and a slowdown in demand. Market participants adjusted their buying and selling indications for various grades, resulting in downward price movements. The price ranges provided below represent discussions, bids, offers, and widely recognized benchmark prices for the region.

Ex-tank prices in Singapore remained steady to slightly lower compared to the previous week. Spot prices for Group base oil sn 150 grade hovered within the range of $910/t to $940/t, while the base oil sn 500 grade saw a decrease of $10/t, settling at $1,010/t to $1,050/t. Bright stock also experienced a decline of $10/t, ranging from $1,250/t to $1,290/t, all ex-tank Singapore.

Group II prices witnessed a downward shift, with the 150 neutral grade decreasing by $20/t to $990/t to $1,030/t, and the 500N grade edging down by $10/t to $1,030/t to $1,080/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 grade prices were assessed down by $20/t, ranging from $700/t to $740/t, while the SN500 grade also experienced a $20/t decrease, settling at $840/t to $880/t. Bright stock prices saw a similar decline of $20/t, ranging from $960/t to $1,000/t, FOB Asia.

Group II 150N prices decreased by $20/t to $860/t to $900/t, FOB Asia, while the 500N and 600N cuts edged down by $10/t to $910/t to $950/t, FOB Asia.

In the Group III segment, prices were softer overall. The 4 centiStoke grade slipped by $10/t to $1,510/t to $1,540/t, while the 6 cSt grade also experienced a $10/t decrease, ranging from $1,480/t to $1,520/t. The 8 cSt grade was assessed down by $10/t as well, settling at $1,100/t to $1,140/t, FOB Asia, for fully approved product.

source:

www.lubesngreases.com