Asia Group II base oils prices to bottom out on snug supply

Jasmine Khoo

23-Feb-2016

Asia Group II base oils prices to bottom out on snug supplySINGAPORE (ICIS)–Spot export prices of Group II base oils in Asia are poised to bottom out in the near term because of snug availability of spot material in the market, particularly the 150N and 500/600N grades, industry sources said on Tuesday.

A cautious management of inventories by regional refiners should lend support to base oils prices, they said.

Most market players that ICIS talked to at the ICIS World Base Oils conference in London on 17-19 February share the same view.

Some refiners have limited availability for March-shipment lots, leading to lower exports, market sources said.

Regional suppliers are cautious about offering cargoes amid snug spot supply, they said.

“We are not in a hurry to offer Group II cargoes. Demand is improving after the Lunar New Year, and the Chinese buyers seem to be restocking,” a northeast Asian refiner said.

Most countries in southeast and northeast Asia were on holiday on 8 February for the Lunar New Year, with the Chinese markets closed for a full week from 7-13 February.

“For now, we have limited spot cargoes, so we will take things slow for March,” the refiner said.

A separate northeast Asian refiner said: “March spot supply is very tight for us. In fact, we are not going to be offering much for March, and will focus mainly on contractual commitments.”

A rebound in upstream crude values last week could also help lift base oil prices, market sources said.

Some buyers agree that prices appeared to be bottoming out.

“I would not be surprised if prices bottomed out, as refiners are all saying that they are tight on supply,” a northeast Asia-based base oils importer said in Mandarin.

If prices do increase, it could be a good thing as downstream lubricants demand and prices could also receive some form of support,” the importer said.

On 19 February, Group II 150N base oil prices were assessed at $400-420/tonne FOB (free on board) NE (northeast) Asia, whereas Group II 500N prices stood at $510-530/tonne FOB NE Asia, according to ICIS data.

Focus article by Jasmine Khoo

Asia Group II base oils - ICIS Dashboard Price History

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?