Crude oil futures traded slightly higher on Monday morning on an absence of negative news after sliding over several days last week. Prices stabilized despite uncertainties brought about by the U.S.-China trade war. Analysts awaited an OPEC+ meeting next week where the possibility of raising output would be considered.

The barrage of tariffs announced by Trump were expected to upend existing trade patterns and supply chains, and leaders of several countries in Asia were preparing for negotiations with the U.S. but were also eyeing new trade opportunities with China.

Trump has imposed 10% tariffs on most countries but has paused some of the steepest tariffs that would apply to many U.S. trade partners for 90 days after global financial markets crashed earlier this month. The president said he planned to negotiate individual trade agreements with some of these countries but still increased tariffs on Chinese imports to 145%. Chinese President Xi Jinping retaliated with similarly steep levies of 125% on U.S. goods.

The effect of the tariffs on Chinese imports has already been felt in some markets as they have dampened business transactions. Many U.S. blenders import raw materials and components from China. “The magnitude of the taxes are already dramatically affecting American imports, with the shipping containers set to arrive at the Port of Los Angeles down nearly 36% over the past two weeks,” Yahoo News reported, citing data from Port Optimizer, a vessel tracking service.

The stiff tariffs imposed on U.S. products shipped to China were impacting shipments of additives, polyalphaolefins and other raw materials, and buyers in China were being forced to consider other sources such as Europe because they would not be able to remain competitive after the 125% duties were applied on U.S. imports.

Meanwhile, the drop in demand for Chinese goods in the U.S. has slowed down industrial production in China. This was expected to affect industrial lubricant consumption and reduce the call for Group I heavy grades and bright stock.

Earlier in the year, Chinese base oil consumers had been concerned about a tight Group I spot supply scenario in the region, but domestic production and contractual volumes appeared to be able to meet most demand – with the exception of bright stock – despite turnarounds at a couple of Chinese units and an upcoming maintenance program in Thailand.

Given uncertainties stemming from the ongoing U.S.-China trade war that has impacted so many different economic sectors, base oil buyers were very conservative in terms of purchased volumes as they worried about demand from various downstream segments. At the same time, it was heard that China had found alternatives to continue to ship products to the U.S., for example, by shipping products through third countries, and this was allowing some factory activity to continue unabated. However, the Labor Day holidays in China starting on May 1 were expected to slow business and manufacturing operating rates, although some last-minute base oil deals were heard to have taken place last week ahead of the holiday.

Southeast Asian availability of Group I grades was still deemed tight and this allowed most prices to hover at steady levels. Bright stock once again stole the show, and prices edged up this week on healthy demand and limited spot volumes. This grade is difficult to replace, and buyers therefore appeared willing to pay the steeper prices. A majority of Group I production was earmarked for domestic consumption and term contracts in Southeast Asia, leaving few cargoes available for spot business. Ongoing plant turnarounds and the upcoming Golden Week holidays in Japan also dampened activity in that country.

There had also been some concern about limited Group II supplies from South Korea given a 45-day turnaround at the GS Caltex facilities. The maintenance program has been completed, and additional volumes were anticipated to enter the supply system over the next few weeks – relieving some of the price pressure observed of late – although uncertainties lingered about whether the plant would be running full out after the restart process and about how long it would take to rebuild inventories.

Group II availabilities from local refineries were deemed quite sufficient to meet demand in China, although the high-viscosity grades were more difficult to locate as there is still a structural deficit of the heavy cuts in the country.

A couple of cargoes of various grades were being discussed for shipment to China over the next few weeks, with about 17,000 metric tons mentioned for lifting in Singapore in May and 6,900 tons expected to be loaded in Hong Kong to Tianjin and Busan, South Korea, on May 8-12.

Along similar lines as in China, in India the Group II light grades appeared to be more readily available from local suppliers and regional refiners following the completion of turnarounds at a couple facilities. Buyers remained hesitant about acquiring more product than necessary on concerns that prices had not bottomed out yet.

However, strengthening gasoil values and healthier restocking activity ahead of the monsoon season starting in early June were prompting some Indian buyers to start looking for cargoes as higher crude and feedstock prices could start to exert upward pressure on base oils. Regional availability of the heavy grades could also remain strained as it was not clear whether GS Caltex would be running full out following its plant turnaround in South Korea. Availability of domestic base oils could also be limited by the recent turnaround at the BPCL plant.

Discussions in the Group III category were more muted because demand for these grades is not as robust in India, but ongoing and upcoming turnarounds at two Middle East facilities had stirred up some concerns about a tightening of the market and the possibility that prices would move up. This sentiment was exacerbated by limited spot supplies from South Korea as a producer prepared for a turnaround.

There was also some nervousness surrounding Group I supplies in India, with CFR India offers for imports of the SN500 cut and bright stock edging up slightly week-on-week because of strained availability from Southeast Asia and Iran as a refiner was preparing for a turnaround. However, buyers have been leaning more heavily on domestic supplies and were waiting to receive additional offers in May and June.

In shipping circles, several cargoes were being discussed for shipment to India, including a 2,000-3,000-ton lot for possible lifting from Pyongtaek, South Korea, to Hazira on May 10-20. A 6,000-ton cargo was expected to be shipped from Daesan, South Korea, to Mumbai and Karachi, Pakistan, between May 15-19. A second 2,000-ton parcel was quoted for shipment from Daesan to Mumbai on May 10-20. A 2,400-ton lot was on the table for shipment from Malaysia to West Coast India in late April. About 15,000 tons were also being considered for shipment from Ulsan, South Korea, to Mumbai and/or Hamriyah, United Arab Emirates, in late May.

Other discussions included a 1,500-ton cargo likely to load in Yeosu, South Korea, to Taichung, Taiwan, between May 15 and 22. A second cargo of 900 tons was also mentioned for lifting in Onsan to Taichung in mid-May. A 3,500-ton parcel was discussed for shipment from Yeosu to Haiphong, Vietnam, in mid-May. A 1,000-ton lot was also on the table for shipment from Onsan to Ho Chi Minh, Vietnam, between May 10-14.

Production

The global base oil supply and demand balance has become more strained as a string of permanent plant closures, unplanned outages and maintenance programs have reduced availability, and upcoming turnarounds may reduce supplies further.

In the Group I segment, Indian refiner Hindustan Petroleum Corp. Ltd. was expected to restart its Group I unit this month after a partial turnaround that started in late Feb. HPCL was also heard to be planning a 45-day turnaround at its Group II trains, but this could not be confirmed. Also in India, Chennai Petroleum Corp. Ltd. has scheduled a one-week turnaround at its Group I plant in Chennai this month.

In China, PetroChina’s Dalian Petrochemical Group I plant in Liaoning province was shut down permanently in late 2024 due to the expected closure of the associated refinery in mid-2025 for its relocation. At the same time, there had been expectations that PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils that would likely help offset the Dalian closure, market sources said. Fushun has not yet confirmed the Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 tons per year. There were expectations that Fushun would be ready to start producing additional Group I in April.

Also in China, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and II plant that started in March.

In Japan, tight Group I conditions persisted after the extended shutdown of a Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024, but the plant was heard to have been restarted. This plant has been scheduled for a turnaround from May until July. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program which began in September 2024 and was completed at end of the year. Eneos also plans to complete maintenance at its Kainan and Mizushima plants this year. The Mizushima B plant was expected to be shut down in Feb. for an extended turnaround that will last until May. All of these shutdowns come on the heels of the permanent closure of two Eneos Group I plants over the past three years.

Another outage that was expected to have some impact on Group I supplies was the ten-day turnaround at the IRPC Group I plant in Thailand in May. While the producer was expected to build inventories ahead of the outage to meet term obligations, it was likely to prioritize domestic commitments and reduce volumes offered for spot business.

Further down the road, it was heard that Thai Lube Base Oil PLC may be shutting down a Group I lube base oil production unit from mid-July until late August.

Recently, the Pertamina Group I plant in Cilacap, Indonesia, underwent maintenance work from mid-January until late February or early March, according to reports. This had constrained volumes available for export from the facility, but the plant was heard to have been restarted, and additional cargoes were expected to be offered into the spot market.

Within the Group II segment, a number of planned turnarounds and an unplanned run cut may also result in tight supply of certain grades.

South Korean producer GS Caltex was heard to have restarted operations following a 45-day turnaround at its Group II and III unit in Yeosu in late Feb. The producer had built inventories to cover term commitments during the outage, but spot supplies remained limited. The plant was heard to have completed the maintenance program last week, but it was not clear when the unit would be running at top rates.

Also in South Korea, Hyundai Oilbank Shell Base Oil had significantly reduced operating rates at its base oil plant since early March due to a refinery outage that had limited the plant’s feedstock supply. Rates were heard to have been increased, with the plant heard to be running at around 80% capacity.

In China, an unplanned outage at the CNOOC Group II unit in Huizhou may be impacting availability in the domestic market.

As mentioned above, Sinopec was understood to have scheduled a two-month turnaround at its Gaoqiao Group I and II plant starting this month. Sinopec was also expected to shut down its Jinan unit for one month in April.

In India, it was heard that Bharat Petroleum Corp. Ltd. completed maintenance work at its Group II facilities in Mumbai in March. The maintenance program started in late Feb.

In the Middle East, Luberef will be shutting down its Group I and II units in Yanbu, Saudi Arabia, for a two-week maintenance program at the end of the first quarter or beginning of the second quarter and was expected to limit spot sales to build inventories ahead of the shutdown.

In the U.S., Chevron was expected to shut down its Group II plant in Pascagoula, Mississippi, in April for a three- or four-week turnaround and has built inventories to cover requirements during the outage, possibly causing some tightening of Group II spot supplies. There was no direct confirmation about the turnaround from the producer.

There were also reports that S-Oil had trimmed operating rates at its Group II and III plant in Onsan, South Korea, due to reduced global demand.

In the Group III segment, SK Enmove will be completing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Adnoc was expected to shut down its Group II and III plant in Ruwais, Abu Dhabi, UAE, for two to three weeks in late April.

Also in the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in early April, but the turnaround may have been delayed, although further details could not be confirmed.

Prices

Crude oil futures finished down last week on concerns about the impact of tariffs and reports that OPEC+ was considering an output increase in June. There were also hopes regarding a possible resolution of the Russia-Ukraine war, which would potentially allow more Russian crude to enter the market. However, prices ticked up on Monday morning as it appeared unlikely that the war would soon come to an end, and there were conflicting signals about the trade negotiations between the U.S. and China.

On April 28, Brent June 2025 futures were trading at $66.57 per barrel on the London-based ICE Futures Europe exchange.

Dubai front month crude oil (Platts) financial futures for May settled at $66.83/bbl on the CME on April 25, compared to $66.98/bbl on April 21.

Spot base oil prices were generally steady to firm, depending on supply and demand fundamentals. The price ranges portrayed below reflect discussions, bids and offers, as well as deals and published prices widely regarded as benchmarks for the region.

Ex-tank Singapore prices were steady to firm. The Group I solvent neutral 150 grade was assessed at $790/t-830/t, and the SN500 was holding at $1,040/t-1,080/t. Bright stock prices edged up by $10/t to $1,380/t-1,420/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were heard at $840/t-880/t, and the 500N at $1,080-1,120/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 held at $650/t-690/t and the SN500 was assessed at $910/t-950/t. Bright stock prices moved up by $10/t to  $1,240/t-1,280/t, FOB Asia on tight supplies.

The Group II 150N was heard at $690/t-730/t FOB Asia, while the 500N was holding at $970/t-1,010/t FOB Asia.

In the Group III segment, 4 cSt was steady at $1,060/t-1,100/t, 6 cSt was unchanged at $1,070/t-1,110/t, and 8 cSt was assessed at $950/t-990/t, all FOB Asia.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.