Indian Group III base oil prices rebound in March

India's Group III base oil prices have rebounded in March, tracking a generally firm trend in other base oil prices and supported by weaker-than-usual Group III to Group II premiums.

Indian blenders typically have more demand for Group II than Group III base oils given their affordability and ample supply of Group II base oils. But Group II prices have risen following a recent tightening of supplies, narrowing the spread between Group II and Group III prices.

India's Group III 4cst cfr import prices were at a premium of $90/t to Group II N70 cfr import prices in the week to 15 March, way below the five-year average of $212/t. Group III 4cst was assessed at $1,000/t cfr India in the week to 15 March, rising by $5/t from the previous week.

Even as import prices rebounded, current prices remain below some suppliers' price expectations given weaker-than-normal margins, hindering trades. Indian 4cst cfr import prices were at a premium of $223/t to four-week Asian gasoil values in mid-March, in contrast to a five-year average of $360/t. But supply of 4cst is still ample and some suppliers remain under pressure to meet buyers' price expectations.

Continuing maintenance at South Korean producer SK Enmove's 26,000 b/d plant in Ulsan from 13 March to 14 April and an upcoming turnaround at its plant in Dumai, Indonesia, which can produce up to 505,000 t/yr of Group III base oils, in May may offset some of the supply pressure in Asia. The Dumai plant is a joint venture with Indonesia's state-controlled Pertamina.

India's Group III 8cst import prices had rebounded earlier in February, as supply was more balanced than other Group III grades and demand was firmer with its use in more applications. Heavier base oil grades are in tighter supply than light grades, lending more support to 8cst.

Finished lubricant demand is robust in India ahead of the end of its financial year on 31 March and firm economic growth.

By Chng Li Li