The base oil market has not yet established a clear trend due to the start of the new year and changes in fundamental factors, and prices have not increased significantly compared to last year. The cost of base oil varies depending on the grade; some grades have seen price increases as a result of rising demand, while others have seen price decreases or have stayed the same. Base oil is impacted by the price of crude oil, which fluctuates and highlights the market’s unpredictability.
Base oil India Report
By the end of 2022, import volumes in India were lower than they had been during the same time the year before. This also happened at the same time when Indian consumers’ demand for base oils was weak. Due to the scarcity of affordable cargo and high costs, U.S. exports were virtually missing. Additionally, plant maintenance in the Middle East reduced the availability of export cargo destined for India.
However, there were signs that things were picking up, and many Saudi Arabian and United Arab Emirates shipments were being worked on. In the middle of February, a shipment of between 10,000 and 16,000 metric tons of base oils from Ras Laffan and/or Sitra, Bahrain, to West Coast India was under consideration. In the second half of February, a 4,000-ton package was indicated for lifting from Yeosu, South Korea, to Mumbai. There were also plans to transport a 5,000-ton batch from Malacca, Malaysia, to Chennai in the second part of January.
On the assumption that prices would drop over the next several days, buyers in India continued to be cautious and acquired only smaller base stock cargoes to maintain daily operations. Consumers were reassured that they could obtain the local product since domestic base oil producers were operating their operations at full capacity, even though light grades were slightly scarce. However, at least a few light-grade cargoes from South Korea had been scheduled to arrive in late January and February.
Base Oil Trends In China
It was anticipated that business would be rather slow until after the Lunar New Year holidays when a large number of purchasers usually return to the market to replenish depleted stockpiles.
Concerns about a worldwide recession were still having an impact on the use of petrol and lubricants in other Asian countries as well. The economic slowdown in China spurred on by rising COVID infections has hindered chances for a robust demand pick-up ahead of the holidays. Media sources state that China’s GDP increased by 3% in 2022, which is less than the government’s aim of 5.5% and is down from 2021’s 8.1% growth rate.
Declining auto sales in China in December from the same month the year before indicated a gloomy consumer attitude.
Reports that indicated a declining population for the first time since 1961, when a famine brought on by former leader Mao Zedong’s Great Leap Forward plan killed about 30 million people, dealt another blow to China’s self-confidence. Although it was not anticipated that these consequences would be noticed right once, this tendency will have an impact on the future economic development of the nation.
At the same time, Before the Lunar New Year holidays, a significant number of Chinese citizens fly back to their hometowns, increasing demand for fuels and lubricants from the automobile and transportation sectors. Additionally, it was anticipated that blenders would buy base oils after the holidays to expand lubricant production in preparation for the spring oil-changing season.
Given the lackluster demand and the potential to satisfy needs with sufficient domestic supplies, Chinese importers have exhibited a muted interest in imports. Due to the recent decline in demand, several Chinese base oil factories were reported operating at lower rates, and some of them were also stopped for tax inspections, according to sources.
Appetite for large-grade import purchases: API Group I bright stock in particular was anticipated to strengthen in China as industrial activity was likely to increase after the Lunar New Year and COVID infections were also anticipated to stabilize, though some observers noted that numbers might drastically increase as a result of the temporary mass migration during the festivities.
Base Oil Export In Asia
In the region, demand for the bright stock was typically high compared to tight supplies, which caused spot prices to soar. Thailand had some good stock availability, but customers were delaying their purchases in the expectation that prices would drop since other base oil prices were declining.
Although the demand for Group II grades was rumored to be increasing, Taiwan’s export volumes were predicted to be lower than typical in January as the only Group II manufacturer seemed to have fewer cargoes available for export. The manufacturer may be increasing supplies in anticipation of a turnaround, but this couldn’t be confirmed.
Group II and Group III grades have been sent to a variety of locations, including the United States and other ports in the Americas, by other Northeast Asian manufacturers, mostly in South Korea. It was planned to transport a 4,000 metric ton lot of two grades from Daesan or Ulsan to Houston, America, in January or February.
In February, it was planned to export between 3,000 and 5,000 metric tons from Onsan to Houston or New Orleans in the United States. Early in February, it was also overheard that a modest 1,000-ton cargo will be sent from Onsan to Bangkok, Thailand. In the second half of February, it was discussed to hoist 2,000 tons in Yeosu or Ulsan towards Gebze, Turkey.
Base Oil Price In Asia
Based on market fundamentals, spot base oil prices in Asia fluctuated, with some base oils’ values nudging up, some falling, and some holding flat. The price ranges shown here are based on negotiations, offers, and bids, as well as deals and published prices that are commonly considered regional standards.
The majority of ex-tank Singapore pricing was adjusted lower. The Group I Solvent Neutral 150 Grade Spot Price was $20/t lower at $920-$950/t, while the base oil SN500 Spot Price was $20/t lower at $1,030-$1,070/t. Bright stock, all ex-tank Singapore, remained stable at $1,280/t-$1,320/t.
Prices for the 500N were downgraded by $30/t to $1,000/t-$1,050/t, ex-tank Singapore, while the prices for the Group II 150 neutral were reduced by $20/t to $970/t-$1,010/t.
Group I base oil SN150 prices FOB Asia decreased by $20/t to $790/t-$830/t, but base oil SN500 prices remained the same at $820/t-$860/t. The price of bright stocks increased by $20/t to $1,060/t-1,100/t, FOB Asia.
The Group II 150N assessment was reduced by $20/t to $800/t-$840/t FOB Asia, while the 500N and 600N cuts were reduced by $10/t to $820/t-$850/t FOB Asia.
Prices stayed virtually the same in the Group III group. The 4 cSt was valued at $1,520–1,560/t, while the 6 CST remained constant at $1,490–1,530/t. For a completely certified product, the 8 CST grade was trading between $1,210 and 1,250 per t, FOB Asia.
| SN 150 | SN 500 | Bright Stock | N 150 | N 500 | |
|---|---|---|---|---|---|
| Singapore | $920/t-$950/t | $1,030/t-$1,070/t | $1,280/t-$1,320/t | $970/t-$1,010/t | $970/t-$1,010/t |
| FOB Asia | $790/t-$830/t | $790/t-$830/t | $1,060/t-1,100/t | $800/t-$840/t | $820/t-$850/t |
