Aside from these concerns, market attention was focused on crude oil and feedstock prices as they continued to be swayed by geopolitical tensions in the Middle East and Ukraine, together with expectations of a potential global oil supply glut in the coming months.

Under this cloud of uncertainty, many base oil buyers adopted a cautious stance and preferred to secure only term volumes needed to keep daily operations running. Aside from price uncertainties, a need to hold lean inventories to avoid tax repercussions at the end of the year seemed to drive consumers’ purchasing behavior.

Despite the slowdown, the API Group I segment continued to be reported as snug given that demand remained healthy and production was limited because of the rationalization of Group I facilities in recent years. Bright stock was once again in the limelight as it is a difficult cut to replace and many applications still require it in their formulations. Furthermore, output shutdowns early next year might tighten supplies further. As a result, bright stock prices were stable to slightly higher this week.

Most of the regional Group I production originates in Southeast Asia and Japan, and producers have been focusing on meeting domestic demand first and exporting surplus material whenever possible. Export volumes remained strained and might become even more limited when a Group I plant in Thailand starts a turnaround early next year. The turnaround was expected to last for approximately two months and the producer was likely to build inventories ahead of the shutdown, but it may not have extra availability for spot shipments.

Aside from the Thai turnaround, a number of recent and ongoing shutdowns have affected Group I availability. In Indonesia, it was heard that Pertamina had started a turnaround at its Cilacap Group I unit in mid October that was expected to be completed in the first part of November.

In Japan, Idemitsu’s Group I plant went offline following a fire last July and is unlikely to resume production until some time this month. A two-month turnaround at the Cosmo Oil unit in Yokkaichi that began in late September was expected to be completed this month as well, although there was no direct producer confirmation about the shutdowns.

The permanent closure of Dalian Petrochemical’s Group I plant in China before the end of the year, with the company expected to shut down the affiliated refinery by mid 2025, might also lead to a slight product tightening in the country, although a second producer was heard to have offered some spot volumes for export, indicating some length.

The Group II grades have started to be more widely available in Asia and prices were under pressure, particularly for the light grades, although they were more stable in China because domestic suppliers have increased prices as they expected few imports to compete with. The sole Taiwanese Group II producer, Formosa Petrochemical, has reduced its exports to China since June because of the re-imposition of tariffs on refined products by the Chinese government. The producer was heard to have reduced its operating rates for the Group II 500 neutral cut because of refinery economics.

Chinese buyers continued to favor domestic base oils for the most part versus purchasing imported base stocks as local producers were offering competitive prices, although importers still sought Group I imports because these grades were short within the Chinese supply system, particularly bright stock, and there were concerns of increased tightness ahead of the Lunar New Year holidays next January due to the Thai plant turnaround. As a result, current bright stock offers from Southeast Asia have inched up.

In India, consumers were hesitant to secure products that might lose value in the coming days, given volatility in crude oil prices and declining regional base oil demand. Many participants had enough inventory to run operations for some time and did not see the need to jump at the first offer they received.

At the same time, a number of Asian suppliers preferred to hold on to pricing because their inventories were manageable, and spot availability was not overwhelming. A Chinese producer offered Group I and Group II December cargoes through a tender the previous week, and there were indications that the supplies had been sold to Southeast Asia. A 4,500-metric ton cargo was under discussion to be lifted in Shanghai to the Straits on December 20-30. Additionally, a 2,600-ton lot was likely to be shipped from Onsan, South Korea, to Zhangjiagang in mid December.

Group II availabilities were deemed adequate to cover the current call for product in India, and there were expectations that additional volumes would be moving from the U.S. as suppliers traditionally try to find a home for their extra supplies before the end of the year. With the hurricane season in the Atlantic Basin officially over, there was less of a need to keep the additional volumes, and more attractive offers were anticipated to emerge in the coming days as U.S. participants return to the market following the Thanksgiving holiday on November 28.

This was not the case for the Group I cuts, which maintained a steady course in terms of pricing due to the scarcity of most grades, although there were some competitive numbers bandied about for Middle East material. With a couple of Group I turnarounds scheduled in Asia in the first quarter of 2025, Group I availabilities were likely to remain tight in the region, supporting prices.

The Group III cuts continued to be described as ample and since demand subsided in other regions such as Europe and the U.S., additional parcels were expected for offer in Asia. The most abundant grade was the 4 cSt and suppliers continued to vie for market share. The 6 cSt and 8 cSt were deemed more balanced against demand. In India, Group III prices were heard to have stabilized and suppliers preferred to wait rather than adjust prices further, as lower prices do not necessarily lead to additional orders.

In shipping circles, a 12,000-13,000-ton cargo was quoted for loading in Yanbu/Jeddah, Saudi Arabia, to Mumbai and Hazira the first week of January. A 2,000-3,000-ton lot was discussed for shipment from Thailand to West Coast India (WCI) and United Arab Emirates in late December. A second parcel of 3,000 tons was mentioned for possible lifting in Rayong, Thailand, to Mumbai on December 10-15. A 4,000-5000-ton parcel was expected to be shipped from the United Arab Emirates to WCI and/or Singapore in mid December. A 3,000-ton lot was being considered for shipment from Port Klang, Malaysia, to Mumbai and Kandla in late December.

Crude

Crude oil futures have been under pressure from high interest rates, a strong dollar, weak manufacturing rates and high U.S. oil production. There were expectations that the OPEC+ was considering a postponement of its oil output hike that was scheduled to start in January for the first quarter of 2025, with its next policy meeting having been delayed to December 5 from an original date of December 1.

On December 2, Brent February 2025 futures were trading at $71.84 per barrel on the London-based ICE Futures Europe exchange, from $74.72/bbl for January futures on November 25.

Dubai front month crude oil (Platts) financial futures for December settled at $71.35 per barrel on the CME on November 29, from $74/bbl on November 22.

Prices

With activity seemingly more muted this week, spot base oil prices were generally stable, although bright stock edged up slightly. 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 mixed. The Group I solvent neutral 150 grade was hovering at $780-820/t, and the SN500 was heard at $1,030-1,070/t. Bright stock prices inched up by $10/t to $1,310-1,350/t, all ex-tank Singapore.

Prices for the Group II 150 neutral were at $850-890/t and the 500N was heard at $1,050-1,090/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was unchanged at $650-690/t, and the SN500 was holding at $910-950/t. Bright stock prices moved up by $10/t at the low end of the range to $1,110-1,150/t, FOB Asia as buyers adjusted bids up.

The Group II 150N was unchanged week on week at $700-740/t FOB Asia, and the 500N was also holding at $920-960/t FOB Asia.

In the Group III segment, the 4 cSt grade was unchanged at $1,030-1,070/t, and the 6 cSt was holding at $1,060-1,100/t. The 8 cSt cut was assessed at $960-1,000/t.

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.