SINGAPORE (ICIS)--Asia’s spot base oils market will expect demand to whittle down as bearish sentiment deepens over lack of price direction amid falling crude futures.(Source: Wallace Woon/EPA/REX/Shutterstock)
Base oils prices are likely to come under downward pressure as buyers are expected to be sidelined at a time of crude volatility.
Brent crude futures plummeted by more than 4% on 22-23 May, following a large increase in US crude stocks and concerns over the escalated US-China trade war.
During the week ended 24 May, Group I average prices for SN150 lost $10/tonne to $620/tonne FOB (free on board) Asia, while SN500 and brightstock remained unchanged at $600/tonne FOB Asia and $807.5/tonne FOB Asia respectively, according to ICIS data.
Demand for Group I material is likely to remain lackluster although the extent of any downside would be capped given refinery turnarounds in Japan, where JXTG Nippon Oil & Energy’s Mizushima B and Kainan units and Idemitsu Kosan’s Chiba unit are offline.
As for Group II base oils, average prices for 150N shed $2.5/tonne to $625/tonne FOB northeast (NE) Asia, while 500N was flat at $645/tonne FOB NE Asia over the same period, ICIS data showed.
Demand for heavy grade 500N was relatively healthier than that of light grade 150N, with South Korean refiners having received more enquiries early last week prior to the crude rout.
Buying interest for import cargoes in China was especially muted due to the depreciation of the yuan against the dollar stemming from the US-China trade saga.
In India, Group I and II overall import prices remained at largely range-bound levels, with demand expected to taper in June due to the approaching monsoon season.
Group III prices are set to track the general trend of Group I and II base oils.
Average spot prices in Asia for Group III 4, 6 and 8cSt were at $835/tonne FOB Asia, $840/tonne FOB Asia and $755/tonne FOB Asia respectively in the week ended 24 May, ICIS data showed.
Focus article by Matthew Chong
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