Base oil prices in the Asian market demonstrated a general trend of maintaining stability, with minimal fluctuations observed. While certain segments faced downward pressure due to weakening demand, particularly in China, efforts were made to mitigate the impact. Macroeconomic uncertainties continued to cast a shadow over purchasing trends across various regions, leading to cautious market dynamics. Additionally, a number of turnarounds taking place in Asia, coupled with suppliers’ proactive inventory building, contributed to alleviating the price situation. The stability in crude oil and feedstock prices further played a significant role in establishing a balanced and consistent pricing environment for base oils.
Crude Oil Futures React to Debt Ceiling Concerns and Dollar Strength
On Thursday, crude oil futures experienced a decline following a brief period of gains earlier in the week. The market sentiment was influenced by concerns surrounding the United States debt ceiling and the potential for default, as well as the strength of the dollar. As of May 25, Brent July futures were trading at $76.95 per barrel on the ICE Futures Europe exchange, showing a slight increase compared to $76.55 per barrel on May 18. Similarly, Dubai front month crude oil (Platts) financial futures for June settled at $76.78 per barrel on the CME on May 24, displaying a rise from $75.18 per barrel on May 17.
Base Oil Trends In Korea
Several base oil plants are currently undergoing turnarounds or will be taken offline in the upcoming weeks, resulting in limited spot supplies. In Northeast Asia, a South Korean producer of Group II and Group III base oils has scheduled an extended turnaround, expected to commence this week. South Korean exports have shown signs of slowing down, with fewer fixtures observed recently. However, earlier this week, discussions were held for several shipments. These included a 4,000-metric ton parcel of two grades for export from Yeosu or Ulsan to Hamriyah, United Arab Emirates, in the first half of June. Additionally, a 3,500-ton lot was considered for lifting from Onsan to Merak and Jakarta, Indonesia, during the first week of June. Another shipment of 3,000 tons was anticipated from Yeosu to Koh Sichang, Thailand, in mid-June, while a 2,000-ton parcel was likely to be shipped from Ulsan or Yeosu to Manila, Philippines, in the first half of June.
Base Oil Trends In China
Following planned shutdowns, several major Chinese Group II plants were anticipated to resume operations this month. However, due to market economics, some units were operating at reduced rates. Despite the lifting of strict COVID-19 restrictions, the projected robust economic recovery in China has not met expectations. While the industrial segment showed improved activity compared to the past three years, certain sectors like automotive and real estate development exhibited weaker performance than anticipated. As a result, there has been a slowdown in the demand for raw materials and a cautious approach to purchasing decisions.
In line with the government’s long-standing objective to reduce reliance on imported base oils, Chinese consumers have primarily been acquiring domestic base oils. However, there remains a deficit of heavy-viscosity grades, particularly bright stock, prompting importers to actively seek import opportunities. Currently, importers are faced with the challenge of finding buyers for cargoes imported earlier in the year, as demand from various lubricant segments has not been particularly robust. Shipping circles have discussed a few transactions involving different destinations in China, including a 2,000-ton shipment from Onsan, South Korea, to Zhangjiagang and Jinjiang for late June arrival, as well as a 1,000-ton lot quoted for early June shipment from Malacca, Malaysia, to Tianjin.
Base Oil Trends In Southeast Asia
From the end of April until late June, a major facility in Singapore is undergoing maintenance on certain base oil trains, primarily impacting Group II supply in Southeast Asia. Additionally, unplanned outages and recent maintenance at Indonesian plants have contributed to limited availability of Group I base stocks, especially bright stock.
Meanwhile, a Group III facility in Europe is currently undergoing a turnaround. However, this is not anticipated to disrupt the supply of base oils to the European Union or other regions. It is believed that the producer’s affiliate plant in South Korea will be producing additional volumes to support the European market during the turnaround, ensuring sufficient supply as needed.
The anticipation of ample supplies from the U.S., Southeast Asia, and the Middle East has led to a slowdown in buying interest for imports in India.
Given the lackluster demand in the U.S. and an excess of light grades, several transactions have been completed by U.S. suppliers. While a major U.S. Group II base oil plant is set to undergo a turnaround in June, it has been reported that at least two other suppliers have abundant supplies. Multiple U.S. shipments are scheduled to arrive in the coming months, including a significant cargo scheduled for August.
Additionally, discussions have taken place regarding the shipment of approximately 10,000 tons of various base oil grades combined with xylenes from Singapore to Mumbai, Hazira, and Karachi in the first half of June. A 6,000-ton lot from Rayong, Thailand, is expected to be discharged in Mumbai, Hazira, or Kandla by the end of May. Furthermore, a shipment of 1,500 to 2,000 tons of two grades from Malacca, Malaysia, to the West Coast of India is anticipated in early June. Lastly, between 8,000 tons and 12,000 tons are expected to be loaded in Daesan and/or Pyongtaek for delivery to the West Coast of India in late June.
The ability of the Indian market to accommodate increased volumes raises questions, given that the onset of the monsoon season in June usually results in a decline in base oil and lubricants consumption. Furthermore, the anticipation of potential price reductions has dampened buying enthusiasm. Consumers are relying on receiving ample contract shipments and are largely avoiding spot purchases in the hopes of benefiting from potential price softening in the future.
Base Oil price In Asia
The spot prices of base oil in Asia remained mostly stable, although some grades experienced slight downward adjustments due to lowered offers. The following price ranges represent discussions, bids, offers, deals, and widely recognized published prices in the region.
Ex-tank prices in Singapore remained unchanged compared to the previous week. The spot prices for Group I base oil sn 150 grade were steady at $920/t-$950/t, and for base oil SN500 at $1,020/t-$1,060/t. Bright stock prices ranged from $1,260/t-$1,300/t, all ex-tank Singapore.
Group II 150 neutral was assessed at $1,010/t-$1,050/t, and 500N at $1,040/t-$1,090/t, ex-tank Singapore.
On an FOB Asia basis, Group I SN150 witnessed a decrease of $10/t, ranging from $740/t-$780/t, while SN500 remained steady at $870/t-$910/t. Bright stock prices dipped by $10/t to $1,000/t-$1,040/t, FOB Asia.
Group II 150N was slightly lower at $890/t-$930/t, FOB Asia, while 500N and 600N cuts also experienced a $10/t decrease to $930/t-$970/t, FOB Asia.
Prices in the Group III segment remained stable. The 4 centiStoke grade was around $1,520-$1,550/t, while the 6 cSt was assessed at $1,490/t-$1,530/t. The 8 cSt grade was heard at $1,110-$1,150/t, FOB Asia, for fully approved product.
|SN 150||SN 500||Base Stocks||N 150||N 500|