Asia Base Oil Price Report（APRIL 27, 2018）

2018-05-02 作者：　润滑油情报网   来源：润滑油情报 网友评论 0 条

The approach of early May holidays in several nations, including the Golden Week in Japan, was believed to have placed a bit of a damper on trading activity during the week.
 

Prices for most API Group I cuts were deemed fairly stable because there have been no product shortages, and demand appeared to be well-balanced against current availability.
 

Additionally, in many cases, when a particular Group I cut was difficult to locate or considered too expensive, buyers have resorted to Group II substitutes as prices of these grades remained competitive.
 

Requirements of Group I grades in the key market China have softened over the last few months as the government has tightened pollution controls, and many small manufacturing plants have shut down temporarily or in some cases, permanently, if they are unable to comply.
 

Since many of these plants purchase lubricants for industrial applications, demand for these oils has dropped and have resulted in lower Group I sales volumes.
 

In India, on the other hand, Group I demand was heard to be fairly healthy, and supply from Iranian producers appears to have resumed.
 

However, because of the availability of attractively priced Group II cuts that can be used in the same applications, some consumers have opted to switch to the higher performance base oils, although this phenomenon is not widespread and there appear to be plenty of Group I inquiries on the market.
 

There were reports that large cargoes of Group II product were moving into India from the base oil plant Yanbu’al Bahr in Saudi Arabia on a monthly basis.
 

Indeed, Group II availability in general appears to be adequate in the region, and no supply problems have been spotted. With a couple of the Group II plants having returned to production following routine maintenance, Asia appears to be regaining its balance.
 

The S-Oil base oil plant in Onsan, South Korea, was heard to have restarted operations following a partial shutdown. The plant had been taken off-line in late March and was understood to have been restarted earlier this month, slightly ahead of schedule. The plant can produce 1.04 million metric tons per year of Group II and close to 1 million t/y of Group III oils, and the maintenance program was heard to have affected mostly its Group III output. The producer exports product to several destinations in the region.
 

It was also heard that Taiwanese producer Formosa Petrochemical would be shipping a higher volume of Group II base oils to China in May compared to April to meet its contractual obligations. Some of its customers may have started to pad inventories ahead of Formosa’s shutdown later this year. The producer was heard to have scheduled a routine turnaround at its Mai-Liao facilities in July 2018. The base oil unit can produce 600,000 metric tons per year of Group II oils.
 

The Group III segment was seeing some downward pressure, particularly in China, given plentiful availability of most cuts against lukewarm demand. A Middle East supplier was heard to have lowered its offer levels for May shipments into China to attract additional spot business. Group III suppliers were expected to continue implementing strategies to gain or retain market share as output capacity has grown in recent years.
 

Given the climb in crude oil values over the last few weeks, base oil prices have been exposed to upward pressure in almost every region regardless of supply fundamentals, with numbers moving up in Europe and the United States.
 

In the U.S., Chevron initiated a 20 cent-per-gallon price increase for its Group II grades on April 25, while naphthenic producers also nominated hikes of 20 cents/gal for their pale oils.
 

Similarly, base oil spot assessments in Asia were stable to firm, supported by supply/demand conditions and higher crude oil and feedstock costs, with the exception of the Group III 8 centiStoke grade, which moved down on lower transaction levels.
 

In terms of ex-tank Singapore numbers, Group I SN150 was unchanged at $770/t-$790/t, while the SN500 was up by $10/t at $900/t-$920/t. Bright stock was steady at $960/t-$980/t, all ex-tank Singapore.
 

Group II 150 neutral was holding at $800/t-$830/t, while the 500N cut was hovering at $910/t-$930/t ex-tank Singapore.
 

On an FOB Asia basis, Group I SN150 was unchanged at $690/t-$710/t, but the SN500 grade edged up by $10/t to reflect current discussions at $840/t-$860/t. Bright stock was holding at $880/t-$910/t FOB Asia, following an upward adjustment the previous week.
 

Group II 150N was steady at $730/t-$750/t, and the 500N/600N at $810/t-$840/t, all FOB Asia.
 

In the Group III segment, the 4 centiStoke was assessed at $870-$890, and the 6 cSt grade was unchanged at $850/t-$870/t. The 8 cSt was slightly down by $20/t at $760/t-$780/t, FOB Asia.
 

Upstream, crude oil prices were mixed on Thursday as the market evaluated the risk of renewed U.S. sanctions on Iran and falling Venezuelan output against a backdrop of strong demand, especially in Asia, the world’s biggest oil-consuming region.
 

United States President Donald Trump was expected to decide by May 12 whether to restore the sanctions, which would probably result in a reduction of Iranian oil exports. The price of oil has risen by about 6 percent in the past month due to speculation that the U.S. might renew the sanctions, according to Reuters.
 

On Thursday, April 26, Brent June futures were trading at $74.63 per barrel on the London-based ICE Futures Europe exchange, compared to $74.26 per barrel on April 19.
 

Fuel prices will be going up in China on April 27, the fifth adjustment since the beginning of the year. China’s National Development and Reform Commission announced a price increase for gasoline and diesel in response to steeper international crude prices, according to Xinhua News. The retail prices of gasoline and diesel will rise by Chinese Yuan (CNY) 255 per metric ton and CNY 245/t, or approximately $40/t and $39/t, respectively.
 

Under the current pricing system, if global crude price fluctuations lead to price increases or declines of more than CNY50 per ton for domestic refined oil products, and remain so for 10 working days, gasoline and diesel prices are adjusted accordingly. Fluctuations in fuel prices in China may affect the lubricants sector as they influence how much consumers use their automobiles.
 

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.
 

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.