Despite ongoing uncertainties, the API Group I sector continued to see steady activity in Asia because of uneasiness about potential shortages once a number of plants in the region start turnarounds. This situation has prompted price increases for bright stock, which remains one of the most sought-after grades as it is still used in many industrial, marine and heavy-duty applications and is not easily replaced.

In China, the permanent closure of PetroChina’s Dalian Petrochemical Group I plant in Liaoning province in late 2024 and closure of the associated refinery in mid 2025 for relocation was anticipated to tighten the Group I supply/demand balance, sending buyers to look for alternative suppliers. Sources said that the local government in Dalian had forced the company to relocate a few years ago, following a number of accidents at the largest domestic refinery, but it could not be confirmed where the new unit would be located. The project has faced multiple hurdles, including its steep cost and particular scrutiny of the Beijing government in terms of its environmental impact given that the country aims at reaching peak carbon emissions before 2030 and net-zero emissions by 2060.

At the same time, there were expectations that China National Petroleum Corporation/PetroChina’s Fushun plant, also located in Liaoning, would be producing additional Group I base oils “to help offset the Dalian closure,” market sources said. Fushun is yet to confirm what Group I volume it will bring online, but earlier estimates had put the Group I bright stock expansion at 60,000 metric tons per year. Fushun was expected to have a six to eight-week turnaround in late Q2 or early Q3 2025, sources added.

In Indonesia, the Pertamina Group I plant in Cilacap will be undergoing maintenance work starting this month and was expected to reduce output until mid February, according to reports. This might exacerbate an already tight supply and demand scenario in the region.

In Japan, two Eneos Group I plants were permanently shuttered over the last three years. Tight Group I conditions persisted after the extended shutdown of Idemitsu Kosan’s Group I unit in Chiba following a fire at the lubricating oil production facility in mid 2024. The unit was due to restart at the end of December and is scheduled for a turnaround in May. A Cosmo Oil unit in Yokkaichi, Japan, underwent an extended maintenance program that began last September and was completed at end of 2024. Eneos also plans to complete maintenance at its Kainan and Mizushima plants this year. The Mizushima B plant will be shut down in February for an extended turnaround that will last until May.

Looking down the road, there will be a turnaround at the IRPC Group I plant in Thailand in May – and preparations for the shutdown may coincide with a seasonal demand increase. While the producer was likely 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.

In the Group II segment, some suppliers adjusted offers up because of squeezed margins as crude oil and feedstock values were on an upward trend since late December. Steady demand for the light grades, particularly as their Group I counterparts have tightened and consumers may opt for replacing them with Group II grades, supported higher price ideas. There was increased buying interest for the Group II light grades from Southeast Asia on expectations of steeper prices and tighter availability.

A scheduled plant turnaround may also affect the Group II supply and demand balance in the region over the next couple of months. South Korean producer GS Caltex was reported to be preparing for a turnaround at its Group II/Group III plant in Yeosu and has started to build inventories to cover term commitments during the outage. The turnaround was anticipated to start in early March and be completed by mid April, likely tightening spot availability in Asia in the first quarter.

With crude oil and feedstock prices having been hovering at firm levels in recent weeks, some refiners have also opted for streaming more feedstocks into fuel production, with a South Korean refiner heard to have increased gasoil production, having trimmed base oil output.

Similarly, the sole Group II producer in Taiwan, Formosa Petrochemical, had reportedly reduced its base oil production in favor of heightened fuel output, but base oil production rates were expected to have been ramped up. The producer has been an active exporter in the region and to the Middle East as the company has reduced its shipments to China due to tariffs imposed in 2024. About 23,000-24,000 tons were expected to have loaded in Daesan, South Korea and Mailiao, Taiwan, for West Coast India and Pakistan in the first half of January. A 4,000-ton lot was discussed for shipment from Mailiao to the Middle East in the second half of February. A 4,000-ton parcel was also quoted for loading in Mailiao to Chittagong, Bangladesh, in mid February.

South Korean cargoes have also been discussed for shipment to China after the Lunar New Year, with a 1,300-ton parcel expected to be shipped from Onsan to Huizhou in February. The CNOOC Group II plant in Huizhou shut down for a 40-day turnaround in November 2024, but it was not clear whether the plant had resumed full production yet.

Two additional South Korean cargoes of approximately 1,000 tons each were mentioned for possible shipment from Onsan to Zhangjiagang, China, next month as well. Other South Korean regional shipments included a 1,300-ton parcel for shipment from Onsan to Taichung, Taiwan, in mid February, and a 2,500-ton lot from Onsan to Tuas, Singapore, in February. A 2,800-ton cargo was also on the table for lifting in Onsan to Merak, Indonesia, in the first half of February. About 3,000 tons to 4,000 tons were also quoted for shipment from Pyongtaek to Chennai, India, in the second half of January.

Additionally, a 4,000-6,000-ton lot was on the table for lifting in the United Arab Emirates to West Coast India at the end of January. A second 3,000-4,000-ton cargo was discussed to cover UAE to WCI in the first half of February as well.

Buyers in India appeared comfortable with current stock levels and with the option of securing domestic product instead of imported material, although there was still steady buying interest for imported Group I cuts. They preferred to wait for further market developments as they speculated that the crude and feedstock price uptrend would be temporary and prices were likely to correct. Indeed, late last week, crude prices edged down on geopolitical tensions and the prospect of increased oil production in the U.S. as the president promised to support more oil drilling.

Some regional price indications into India had edged up, nonetheless, as crude oil values had been hovering at firm levels for most of the month. Sources said that import prices had inched up by $5-10/ton on a CFR India basis week on week. Group I prices, in particular, received additional support from snug supply and demand fundamentals in the region. Discussions for Group II cargoes from the U.S. were muted because suppliers have raised export prices due to crude oil increases and higher production costs.

Domestic prices remained competitive in India, but with fresh international sanctions on Russian crude oil making it more difficult for Indian refiners to import discounted Russian feedstock, Indian refiners were anticipated to buy oil from alternative, more expensive sources. This was likely to place pressure on base oil values.

Group III prices were fairly stable, supported by more balanced supply and demand fundamentals than in the previous months. Demand for Group III in India was stable, but these grades attract far less interest than Group I and Group II cuts, although an uptick in consumption was anticipated in February.

In China, increased Group III domestic capacity continued to exert downward pressure on prices as producers try to protect or increase market share. Volumes imported from the Middle East were heard to have been down in recent months compared to earlier in 2024.

Reports circulated that SK Enmove would be completing a partial turnaround at its Ulsan, South Korea, Group III plant for two months, starting in May, which should partly curtail Group III availability in the region.

Prices

Crude oil futures fell early in the week, after the U.S. President urged OPEC+ to boost output, bring down prices, and increase the pressure on Russia to end its war on Ukraine. Trump also plans to help boost U.S. fossil fuel production, including speeding up permitting and rolling back environmental protections. The threat of U.S. tariffs on several countries also dampened sentiment, with Brent falling to around $78 per barrel, showing its first weekly decline this year.

On January 27, Brent March 2025 futures were trading at $78.43/bbl on the London-based ICE Futures Europe exchange, from $80.53/bbl on January 20.

Dubai front month crude oil (Platts) financial futures for February 2025 settled at $79.76 per barrel on the CME on January 24, compared to $80.75/bbl on January 17.

Spot base oil prices were mixed as suppliers have adjusted indications to maintain margins on the back of steeper feedstock costs over the last several weeks. Some cuts were also tight, offering additional price support, but Group I SN500 edged down slightly on lengthening supply. 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 generally steady to slightly higher from a week ago on tight regional availability. Group I solvent neutral 150 grade was assessed at $770-810/t and SN500 hovered at $1,040-1,080/t. Bright stock prices edged up by $10/t to $1,330-1,370/t, all ex-tank Singapore.

Prices for Group II 150 neutral inched up by $10/t to $850-890/t, but 500N was unchanged at $1,060-1,100/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was assessed higher by $10/t at $650-690/t on steady buying interest and tighter availabilities, but SN500 was adjusted down by $10/t to $900-940/t on lengthening supply. Conversely, bright stock prices jumped by $20/t to $1,150-1,190/t, FOB Asia on snug supply.

Group II 150N was also assessed higher by $20/t at $710-750/t FOB Asia, while 500N was unchanged at $920-970/t FOB Asia.

In the Group III segment, 4 cSt held at $1,020-1,060/t and 6 cSt was also steady at $1,050-1,090/t. The 8 cSt cut was unchanged from a week ago at $950-990/t on muted activity.

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.