FocusAsia base oils fall on tepid Chinese demand

14 October 2008 05:41  [Source: ICIS news]

By Anu Agarwal

 

SINGAPORE (ICIS news)--Tepid demand from Chinese buyers continued to exert pressure on Asian base oils values, with offers falling about 15% from August's highs, regional buyers and sellers said on Tuesday.

 

Offers for group I and II 150-neutral material were heard at a wide range of $1,240-1,320/tonne CFR (cost and freight) NE (northeast) Asia on Tuesday, down from $1,500/tonne CFR NE Asia highs seen two months ago, market sources said.

 

“The lack of buying during September and its failure to pick up even in October is worrying as this is generally the good demand time of the year,” said a northeast Asian base oils producer.

 

China is a major market for base oils in Asia with product imports of around 1.04m tonnes in the first eight months of 2008.

 

“It is difficult to sell (in China) regardless of price,” said another seller, adding the situation could get worse next month.

 

Base oils offers have been falling on the back of falling crude and gasoil prices but not as much as buyers expected, said base oils buyers.

 

“The spread of base oils offers with gasoil prices is still too wide and buyers in general are waiting for prices to hit bottom before making purchases,” said a Taiwanese base oils buyer.

 

0.5% gasoil prices were hovering in the low $600s/tonne in Singapore on Monday and base oils buyers said they were seeking spreads of not more than $250-300/tonne over these numbers.

 

Base oils are used for making automotive and industrial lubricants.

 

Key Asian base oils producers include Exxon Mobil, Shell, S-Oil, SK Energy and Japan Energy.

 

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By: Anu Agarwal
+65 6780 4359

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