Weekly Asia Base Oil Report: 3 – 9 December 2023

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The tempo in Asian base oil markets eased as they stepped into the final month of the year. Some grades witnessed a dip in spot prices due to weakening demand and increasing supplies. Meanwhile, other cuts maintained a stable course, supported by more balanced fundamentals. Market participants closely monitored the fluctuations in crude oil and feedstock values, particularly with the volatility leading up to the OPEC+ virtual meeting scheduled for Thursday.

OPEC+ nations are strategizing to deepen production cuts, aiming to counteract a seasonal dip in oil demand and downward pressure on prices. In the first quarter of 2024, certain countries plan to reduce oil production by approximately 900,000 barrels per day compared to current levels. Saudi Arabia, having voluntarily trimmed its output by 1 million bbl/d since July, intends to extend this cut through the initial quarter. Post-meeting, news emerged about Brazil potentially joining the alliance in January 2024, though it’s premature to gauge the overall impact on oil production.

Considering Mexico’s significance as the primary export market for U.S. base oils, disruptions in shipments have prompted suppliers to explore alternative buyers, particularly in India. This has led to a drop in spot prices in India. Additionally, heightened competition among API Group I base oil producers in India has exerted downward pressure on prices across various grades. The country’s economic indicators reflect robust GDP growth and active automotive and industrial activities. Furthermore, India is expected to be a key driver of economic growth in the Asia-Pacific region, with projections for increased GDP growth in the coming years.

Contrastingly, optimism regarding China’s economic growth has waned among analysts, with a slowdown expected in the base oils and lubricants segments. China has augmented its domestic production of base oils in recent years, leading to reduced reliance on imports, although heavy-viscosity grades remain a deficit. Economic challenges have resulted in the lackluster performance of the base oils and lubricants segments, coupled with diminished import volumes.

Robust demand in Southeast Asia and Japan has absorbed the majority of domestic Group I production, limiting volumes available for exports. Recent shutdowns in Japan, including the permanent decommissioning of a Group I plant, have impacted availability, necessitating imports to meet domestic demand. In the Group II segment, prices remained stable, but upcoming restarts and shutdowns in Taiwan and South Korea are expected to influence market dynamics. Spot availability of Group III base oils is expected to reduce due to planned shutdowns, impacting prices.

Base Oil price In Asia

Shipping updates indicate various shipments of base oils across Asian countries. Base oil spot prices in Asia showed a mixed trend, influenced by supply and demand dynamics, as well as margin pressure from volatile feedstock values. Ex-tank Singapore prices for various base oil grades experienced fluctuations. FOB Asia prices for Group I, Group II, and Group III base oils remained largely unchanged for the week, with some decreases observed in specific grades. The market dynamics continue to be influenced by factors such as demand fluctuations and feedstock value volatility.Base oil spot price assessments showed a mixed trend in Asia for the week, influenced by supply and demand dynamics and margin pressure from volatile feedstock values. Ex-tank Singapore prices remained steady to slightly higher, with the Group I solvent neutral 150 grade increasing by $10/t to $860/t-$900/t, while SN500 remained steady at $990/t-$1,020/t. Bright stock saw a decrease of $20/t to $1,180/t-$1,220/t, all ex-tank Singapore, as demand experienced a seasonal decline.

Group II 150 neutral prices held at $1,010/t-$1,040/t, and the 500N remained steady at $1,040/t-$1,080/t, ex-tank Singapore. On an FOB Asia basis, Group I SN150 remained unchanged at $800/t-$840/t, SN500 hovered at $900/t-$930/t, and bright stock prices decreased by $10/t to $1,000/t-$1,040/t, FOB Asia, influenced by slowing demand during the winter. Group II 150N experienced a decrease of $20/t to $860/t-$890/t FOB Asia, and the 500N also fell by $20/t to $880/t-$910/t, FOB Asia. In the Group III segment, prices for 4 centiStoke, 6 cSt, and 8 cSt were largely unchanged for the week. The 4 cSt was assessed at $1,250-$1,280/t, the 6 cSt hovered at $1,220/t-$1,260/t, and the 8 cSt grade was gauged at $940-$980/t. All indications are FOB Asia for fully approved products.

SN 150 SN 500 Base Stocks N 150 N 500
Singapore $860/t-$900/t $990/t-$1,020/t $1,180/t-$1,220/t $1,010/t-$1,040/t $1,040/t-$1,080/t
FOB Asia $800/t-$840/t $900–930/t $1,000/t-1,040/t $860/t-$890/t $880/t-$910/t
Price Per Ton Base Oil In Asia 3 – 9 December 2023
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