Asian base oil supply shortfall was estimated to persist in the first half year thanks to congested refinery maintenances in Asia. Prices thus would keep uptrend in the period.
Asian base oil prices had rose about US$100/mt in mid February from one month before amid high heavy maintenance season. Moreover, many market players in China, India and Singapore, etc made panic purchases since the beginning of the year, which also contributed to rises in prices.
ExxonMobil, the major base oil supplier in Asia, initiated to raise base oil price US$50/mt in Asia on Feb 16. This enhanced other Asian base oil producers' confidence in the March market. Some producers revealed to mark up export prices US$30-50/mt for March cargoes.
Prices would maintain uptrend in the second quarter, the peak consumption season of lubricants, C1 estimated.
During the period, supplies would not rebound as maintenance schedules were still heavy, said some refinery sources from some Asian refineries. In addition, Asia would be unlikely to receive cargoes from Europe, where demand recovered amid high consumption season as well, they opined.
Besides supply shortfall, the surging international crude benchmarks might lend supports to higher prices as well, pointed out a source with a domestic large-scale lubricant plant. At present, Brent had already exceeded US$110/bbl, he said. The well-off global economy might bring up crude prices further this year, which in turn might drive Asian base oil prices to historic high recorded in 2008, he opined.
In view of tight availability, Chinese importers would cut back on imports in the second quarter, another industry source said. On the other hand, medium and small sized lubricant plants would also cut base oil purchases in the face of hefty feedstock prices, he said. So China's base oil import market would be less active in the second quarter, he concluded.
After refineries finished their maintenance in the first half year, base oil prices in Asia may slip on ampler supplies. Moreover, June-August was a traditional low consumption season of lubricants, so price would slump US$400-500/mt after June in Asian base oil market, unless crude soars, industry sources estimated.
