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Editor Anu Agarwal, anu.agarwal@icis.com
NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.
Summary
Asian base oils prices were assessed stable-to-firm amid healthy regional demand and balanced-to-snug supply for heavier grades. There were spot buyers still seeking heavier grades like 500N and also brightstock and although fixtures were limited, most market players acknowledged a gradual increase in values amid the snug fundamentals. Sellers continued to seek slightly higher prices for all grades, given the higher crude and gasoil values in general over the past few weeks.
Northeast Asia
Chinese base oils demand remained strong and prices generally firm amid balanced-to-tight supply. Domestic prices were stable this week with some small increases seen for brightstock. However, some upward adjustment has been applied to brightstock, heavy grades and group II import prices amid tight supply, higher offers and discussion levels for imported material.
Offers for group I regional cargoes not attracting import duty were pegged in the low-$800s/tonne CFR China and around $920-930/tonne CFR China for SN-500. Other offers for SN-150 were close to $800/tonne CFR China and around $890-900/tonne CFR for SN-500. Offers for brightstock were mostly above $1,000/tonne CFR China with most sources saying that workable prices would need to be above $1,000/tonne.
Domestic prices of SN-150 were stable at yuan(CNY) 8,000/tonne ex-tank including taxes. Local prices of SN400 were also unchanged at CNY8,500-8,600/tonne ex-tank including taxes. Domestic brightstock prices rose CNY50-100/tonne to CNY 10,100-10,400/tonne ex-tank. Local refineries of PetroChina and Sinopec did not raise March prices but were said to have limited cargoes for trade market amid good captive demand from the lubricant operations.
Most market sources expected Chinese demand to hold up during March and April and expectations were for prices to remain firm.
Spot offers for group II cargoes from Taiwan for March cargoes were around $730-740/tonne FOB for 150N and around $820-830/tonne FOB for 500N. However, spot offers from Korea were higher at around $760-780/tonne FOB for 150N and 850-860/tonne FOB for 500N. Buyers were still mulling whether these high prices would work in the Chinese market but conceded that prices in general were up $10-15/tonne from early February values as sellers did not seem to be under any pressure to sell.
In the domestic market prices of 150N were pegged at around CNY 8,200-8,300/tonne ex-tank in eastern China.
Prices of group III 4 cSt material were hovering at $840-860/tonne FOB Asia, said buyers and sellers in the region.
In Taiwan, domestic prices of group II 150N were heard equivalent to $880-890/tonne CFR and 500N at around $760-770/tonne CFR. Offers of Korean group II were heard around $900-910/tonne CFR for 500N and $780/tonne CFR Taiwan for 150N. Demand was holding steady in Taiwan.
Southeast Asia
Ex-tank Singapore prices were assessed largely stable after a $20-30/tonne increase in the values of heavy grades and brightstock last week. Spot offers for both group I and II 150 neutrals continued to be pegged in the low-$800s/tonne ex-tank. Offers for group I/II 500N were around $900-930/tonne ex-tank and for brightstock in a slightly wider price range of low-to-mid $1,000s/tonne ex-tank.
Supply of heavy grades was described as tight with some discussions for prompt regional SN-50 heard around $920-930/tonne CFR Singapore.
Brightstock too was tight with offers in the region mostly at or above $1,000/tonne CFR SE Asia.
In Port Klang, Malaysia, offers for SE Asia and Russian cargoes of group I cargoes were pegged around $830-850/tonne ex-tank for SN-150 and $880-900/tonne ex-tank for SN-500. Offers were heard in a wide range of around $1,020-1,050/tonne ex-tank.
Some quantities of Iranian SN-500 which have been stored in Port Klang for the past several months, were also sold at $830/tonne ex-tank said blenders. This material was selling at a discount to regular material due to its specification/quality issues.
India and the Middle East
Last week's budget announcement in India which hiked import duty on base oils from the existing 5% to 10% took most market players by surprise. Many buyers said they were still not clear how it would impact the base oils market as they returned to work on Tuesday after a spate of festive holidays.
Domestic refiners raised March base oils prices by Rs 1.0-2.50/kg citing higher costs as import duty on crude had also been hiked from zero to 5%.
In the case of group I, offers for Russian cargoes were heard around $760-765/tonne CFR India and for SN-500 at around $790-795/tonne CFR, some $15-20/tonne higher than fixtures during February. However, the duty hike had thrown negotiations off track and it could take some more time before new fixtures were finalised. Several blenders said the unexpected rise in duties could slow down buying for some time as it was tough to pass on higher costs in the finished lube market.
An offer for regional brightstock was heard around $1,010-1,015/tonne CFR India, up $30-40/tonne from February offers of $980/tonne CFR India although no deals were confirmed.
Prices of group II base oils for March deliveries had settled some $10-20/tonne higher than February, said buyers and sellers. For 150N, prices in general were around $750-770/tonne CFR India while for 500/600N prices were around $850-860/tonne CFR India.
Two sell tenders from HPCL and BPCL were there in the market but fixtures were likely to be delayed to next week. HPCL was looking to sell a 5,000 tonne lot including 4,000 tonnes of SN-500 and 1,000 tonnes of brightstock. BPCL was seeking buyers for a combined 5,000 tonne cargo of group II 150/500N and some 1,000 tonnes brightstock and the tender was expected to close by mid-week.
Upstream
London gas oil crack spread eased to $7.76/bbl from last week's $8.16/bbl. Onshore middle distillates stocks in Singapore surged to a three-week high of 14.429 million barrels for the week ended February 24. But the market expected the stocks to be drawn down soon due to a gaping arbitrage window to move diesel supplies to quake-hit Chile.
London gas oil futures:
March $628.00
April $630.25
May $634.50
Production news:
S-Oil shut its 23,000 bpd group II+/III base oils refinery in Onsan, Korea in end February for a period of 30-40 days of routine maintenance. After the turnaround, the group III base oils production capacity will be doubled. Although the company did not specify the new capacity- the current group III production at this refinery is estimated at 9000 bbls/day.
S-Oil also runs another 10,000 bpd of group II base oils line at the same facility and this will continue production during this period.
Although there was no formal statement from Indonesian refinery Pertamina about the restart of its lube base oils complex after the unit suffered an explosion on 24 January, market sources said around half the capacity of 430,000 tonne/year of group I base oils at Cilacap, Indonesia could remain shut for more than a year.
Shipping Fixtures
N.A.
Shipping Enquiries:
500 tonnes NH Base Oils Zjg/H.Kong end Feb/Ely Mar
2,850-9,600 tonnes 3 gr Lubes Augusta/Jebel Ali + Sharjah 12-17 March
5,500 tonnes Base Oils Algeciras/Chittagong 5-15 March
2,500 tonnes Base Oils Livorno/Mombasa 12-15 March
4,500-5,200 tonnes Base Oils Livorno/Mumbai + Fujairah 2H March
8,000 tonnes Base Oils Theodosia/Chittagong + Singapore 1H March
4,500-5,000 tonnes Base Oils West Med/Chittagong 10-15 March
5,500 tonnes Lubes Theodosia + East Med/Singapore early March
1,900 tonnes 2 gr Base Oil Chennai/Trincomalee March dates
2,000 tonnes Base Oils Karachi/Sharjah 1-10 March
3,000 tonnes Base Oils Middle East/Singapore ppt onwards
3,000 tonnes Base Oils Sharjah/Chittagong ppt onwards
3,000 tonnesT Base Oils 2G Mailiao/Shanghai pmt/2 Mar
3,000 tonnes Base Oils 2G Mailiao/Yingkou prmt/2 Mar
2,000MT Base Oils Mailiao/Port Klang 10-20/Mar
1,700 tonnes Base Oils Yokohama/Ulsan prmpt
2,000 tonnes Base Oils Yokkaichi/Ulsan prmpt
2,500 KL Base Oils Ulsan/Kobe prmpt
2/2,100 tonnes Base Oils 3G Kaohsiung/Spore 26 Feb/6 Mar
5,000 tonnes Base Oils B.Bushire or UAE/Jakarta 1W Mar
10,000 tonnes Base Oils Livorno/Tema, Mombasa, Mumbai & Fujairah mid/Mar
2,850 tonnes Lubes 3G Augusta/Jebel Ali 12-17/Mar or ely Apr if via Suez
1,300 tonnes Brightstock Mersin/Mumbai Prmt/10 Mar
($1=CNY6.83)
This week on ICIS news ( www.icis.com)
02-Mar-10 08:19 S Korea's YNCC buys 75,000t naphtha for H1 April; seeks more
02-Mar-10 08:15 Indian base oils import duty hike takes market by surprise
02-Mar-10 05:03 FocusAsia MEG prices under pressure in March as supply balloons
01-Mar-10 21:53 Valero begins hydrocracker maintenance at Corpus Christi, Texas
01-Mar-10 18:15 Chevron Phillips shuts down Texas cracker for maintenance
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