SINGAPORE (ICIS)--Asia’s brightstock spot prices are expected to see a further uptrend, tracking healthy demand amid snug spot availability, market sources said on Tuesday.
According to ICIS data, brightstock spot prices in Asia firmed steadily from an average of $1,110/tonne FOB (free on board) Asia on 3 January to $1,160/tonne FOB Asia on 13 June.
Market sources said that was the result of a combination of factors, which include improved demand from importers in key market China and also limited output of brightstock in the region because of lacklustre demand seen in the colder seasons, which weighed on producers’ sentiment for brightstock.
During early June, some market players voiced concerns over the steady climb in brightstock prices, casting doubts on whether the uptrend throughout the first half of 2014 could be sustained.
Earlier, a regional producer said: “It is difficult to say if brightstock [prices] can continue firming, as buyers’ resistance to higher prices is visibly growing.”
However, a recent turn of events in the regional base oils market reshaped the near-term landscape and prompted varying expectations among market participants.
During the evening on 9 June, a fire which broke out at a key Thai producer's facility is said to have capped spot brightstock availability for the next three months.
The Indian market is also expected to feel the tightness in brightstock availability, leading to firmer offers in the following weeks.
Despite the recent start-up of a domestic producer, Hindustan Petroleum Corporation Ltd (HPCL)’s, facility in the previous week, the Indian market is expected to continue seeing limited availability of brightstock offers, amid buoyant demand in Asia, especially China.
Market sources added that brightstock supply from HPCL is expected to be available only from late June, as it is the heaviest grade among the Group I’s SN150, SN500 and brightstock and would take the longest to be produced.
An Indian importer, who was looking to buy less than 1,000 tonnes of brightstock cargoes during the week, said it received an offer which was deemed too high by the importer. It then opted to wait observe the trend in prices, on expectations of firming prices in India in the near term tracking gains in the broader Asian market.
ICIS assessed brightstock prices in Asia at $1,155-1,165/tonne FOB Asia in the week ended 13 June, indicating an increase of $5/tonne on the low end of the assessed price range.
Veena Pathare contributed to this article