Asia base oils to see heavy maintenance shutdown schedule in Q1

05 January 2011 08:50  [Source: ICIS news]

SINGAPORE (ICIS)--Asian base oils supplies in the first quarter of 2011 could be limited by a spate of regional refinery shutdowns, market sources said on Wednesday.

Concerns about the possible tightening in supply, along with strong crude futures, led Asian importers to accept prices increases of at least $60/tonne (€45/tonne) for Group II January shipments from South Korea.

“Our inventories are on the low side and we are worried that supplies after the Lunar New Year holidays [in February] will be tight due to a lot of refinery shutdowns,” one Chinese importer said.

Some of the Group I base oils facilities scheduled for maintenance in the first quarter include Thai refiner IPRC’s 320,000 tonne/year unit, which would shut for 10 days from 17 January, a company source said.

Japan’s JX Energy & Nippon Oil’s 246,000 tonne/year facility in Mizushima was likely to halt production for about 50-60 days from the middle or second half of March, a company source said.

A few Group II and III base oils facilities are also scheduled for maintenance in the first quarter.

ExxonMobil is expected to shut its Group II plant in Singapore, with an annual capacity of around 900,000 tonnes, in the first quarter, according to its customers.

SK Lubricants had preliminary plans to take its South Korean facilities offline, either late in the first quarter or early in the second quarter, a company source said. The Ulsan complex produces close to 1m tonnes/year of base oils, most of which are Group III products.

Both ExxonMobil and SK Lubricants are likely to shut their units for about a month or longer.

Another four base oils facilities in Japan and South Korea are tentatively scheduled to shut for maintenance or upgrading between May and July.

Still, some regional blenders expect supply conditions to be better than it was in the fourth quarter of 2010 when Taiwanese refiner Formosa Petrochemical halted exports due to a prolonged shutdown at its Group II base oils refinery.

The 520,000 tonne/year facility in Mailiao resumed production on 20 December, nearly five months after it was taken offline for maintenance.

It was originally due to return on stream in the first half of September after a 40-day maintenance shutdown, but the schedule was delayed due to unresolved environmental issues at the parent refinery.

Formosa Petrochemical is expected to resume exports later this month, although the bulk of its shipments in the first quarter will go into covering the supply it owes its long-term customers in the previous quarter, according to a company source.

The start-up of Shell’s gas-to-liquids (GTL) facility in Qatar later this year will also pose a challenge to Asia's Group II and III producers. Shell's project can produce more than 1m tonnes/year of Group III base oils.

($1 = €0.75)

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By: Yeow Pei Lin

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