Weekly Asia Base Oil Report: 15-21 April 2023

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Weekly Asia Base Oil Report: 15-21 April 2023

The Asian base oil market witnessed steady demand in April 2023, and most base oil grades remained adequately available, contributing to generally stable spot pricing. Buyers and sellers closely monitored crude oil and feedstock prices, anticipating any increase that could impact base oil prices in the coming weeks. The bulk of April’s transactions were already completed, and market participants were actively negotiating May and early June shipments. Despite this, some buyers opted to delay their purchases as they awaited a clearer indication of price direction. As the market remains dynamic, the next few weeks will be crucial in determining the overall direction of the base oil prices in Asia.

Base Oil Trends In Asia

Although most base oil prices remained stable, some grades experienced a downward trend due to a slowdown in demand and increased supply. Among the API Group I category, bright stock was the most affected due to sluggish consumption and ample inventories on both buyers’ and suppliers’ sides, particularly in Southeast Asia. This situation was partially attributed to the observance of the Muslim holy month of Ramadan, which occurred from March 22 to April 20 in many countries in the region. As a result, buyers and sellers held on to their inventories, causing a buildup in supplies.

Additionally, the return of a few base oil plants to production also contributed to an increase in availability, leading to lower prices. There was also a rise in the volume of base oil imports from Singapore to Indonesia and an influx of Japanese products to Singapore, resulting in increased competition among suppliers.

Base Oil Trends In India

The Indian market has seen an uptick in buying activity, in contrast to the sluggish interest in imports observed in China. Indian buyers have re-emerged with a strong presence, anticipating tightening supply and potentially higher prices in the near future. The steep crude oil prices and upcoming turnarounds at various base oil plants have contributed to this expectation

As of now, Indian base oil prices have remained stable. Additionally, the strong retail diesel prices have also fueled demand for light viscosity base oil imports into India. This has also encouraged Indian refiners to maintain high operating rates, especially as they continue to benefit from discounted Russian oil imports.

The previous weeks saw a significant number of export shipments to India, but discussions regarding new parcels have decreased in the current week. However, it was reported that a couple of Chinese cargoes were purchased at competitive rates and were set to arrive in India in early April. Additionally, there were scheduled arrivals of cargoes from South Korea and the Middle East in late April and early May. A massive U.S. cargo comprising three grades, totaling 16,000 tons, was also offered for shipment from Houston to Mumbai in early May.

Base Oil price In China

Although base oil volumes shipped from Taiwan and South Korea have decreased, Chinese demand for imports has been lackluster because domestic supply has been sufficient to cover most product requirements. However, there are reports of a stronger-than-expected economic recovery in China, which has fueled expectations of potentially higher demand for base oil and lubricants in the coming months.

According to The New York Times, China’s economy expanded 4.5% from January through March 2023, compared to the same period in 2022, showing a faster pace than expected after the government lifted its “zero Covid” restrictions. Despite the current sluggish demand, some market participants believe that the outlook for Chinese demand is positive and may improve in the near future.

Importers were expected to seek opportunities to supply products to China as a result of several plant turnarounds and reduced operating rates at some refineries in the country.

Although the Group III segment was well-supplied at the moment, upcoming turnarounds of Group III facilities in South Korea might limit spot supply in the second quarter. In the meantime, an Indonesian Group III plant was reportedly resuming operations later this month, following a fire that broke out in the first week of April.

Base Oil Trends In South Korea

There was a decrease in the availability of spot supply from South Korea, leading to fewer cargoes being offered during the week. However, negotiations were still underway, with a possible shipment of a 1,800-ton lot of two grades from Onsan to Bangkok, Thailand, in late May. Another 2,000 tons were also being considered for shipment from Onsan to Taichung, Taiwan, in late May.

In addition, a 2,200-ton parcel was quoted for delivery in Haiphong, Vietnam, after lifting in Yeosu in early June. Further discussions involved about 5,700 tons for late May shipment from Yeosu to Dong Nai, Vietnam, Singapore, and Port Klang, Malaysia.

Base Oil price In Asia

Most spot base oil prices in Asia have been stable, except for Group I bright stock, which has experienced a small downward adjustment due to reduced demand and plentiful supply. Ex-tank Singapore prices have been steady to softer compared to the previous week. The price ranges provided below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

For the Group I solvent neutral 150 grade, spot prices have remained unchanged at $920/t-$950/t, while the base oil sn 500 has also remained stable at $1,030/t-$1,070/t, all ex-tank Singapore. However, the price of bright stock has decreased by $10/t to $1,270/t-$1,310/t, also ex-tank Singapore.

The prices for various grades of base oil in Asia were reported stable for most categories. Group II 150 neutral was assessed at $1,010/t-$1,050/t, and the 500N at $1,040/t-$1,090/t, on an ex-tank Singapore basis.

Meanwhile, on a free-on-board (FOB) Asia basis, Group I sn150 base oil was mentioned within a range of $770/t-$810/t, while the SN500 was holding steady at $870/t-$910/t.

Bright stock prices decreased by $10/t and were assessed at $1,010/t-1,050/t, FOB Asia. The Group II 150N prices remained stable at $870/t-$910/t, FOB Asia, and the 500N and 600N cuts were unchanged from the previous week at $930/t-$970/t, FOB Asia.

In the Group III segment, prices were reported stable with the 4 centiStoke remaining at $1,520-$1,560/t, the 6 cSt assessed at $1,490/t-$1,530/t, and the 8 cSt grade being heard near $1,170-1,210/t, FOB Asia, for fully approved product.

SN 150 SN 500 Base Stocks N 150 N 500
Singapore $920/t-$950/t $1,030/t-$1,070/t $1,270/t-$1,310/t $1010/t-$1,050/t $1,040/t-$1,090/t
FOB Asia $770/t-$810/t $870–910/t $1,010/t-1,050/t $870/t-$910/t $930/t-$970/t
Price Per Ton Base Oil In Asia-15-21 April 2023

crude oil price

The upstream crude oil futures market experienced a decline on Thursday, hitting its lowest level in three weeks due to the strengthening of the dollar and concerns about oil demand following a rate hike by the U.S. Federal Reserve.

Despite reports that showed a drop in U.S. crude stocks, West Texas Intermediate futures slumped. On April 20, Brent June futures were trading at $81.77 per barrel on the London-based ICE Futures Europe exchange, down from $87.09/bbl on April 13. Additionally, Dubai front month crude oil (Platts) financial futures for May settled at $82.37 per barrel on the CME on April 19, compared to $86.45/bbl for April futures on April 12.

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