Few base oil sales were reported completed over the past few days, with holidays and leave being taken by many parties around Europe and parts of the Middle East and Africa. Christmas, having once been only a Christian festival, appears to have been adopted into many regions where alternative beliefs and religions predominate.

With financial markets and trading houses closed on Monday this week, there are no postings for crude or refined products, hence the latest values for crude oil are taken from Friday, when dated deliveries of Brent crude finished the day at $83.92 per barrel, around $4 higher than last week’s level. This shift may be due to a number of factors, not least of which is the hardening attitude of both Saudi Arabia and Russia to limit production, thus tightening availability.

Russia is desperate to capitalize as much as possible on crude sales, having trashed its natural gas sales into Europe, formerly a large source of revenue.

Prices for West Texas Intermediate rose a similar amount, leaving the crack between those crudes around $5 per barrel. Low-sulfur gas oil prices rallied toward the end of last week, but remain much lower than at the height of the market back in May and June of this year, when prices were seen close to $1,300 per metric ton.

Europe

Information about prices for European exports of API Group I base oils remains elusive due to the dearth of offers reported in recent days. Majors continue to move large parcels of base oils to hubs, rebalancing and replenishing stocks in areas such as the Mediterranean, South Africa and the Far East.

One genuine export cargo – consisting of 11,000 metric tons of solvent neutral 150, SN500 and bright stock – has been identified and was loading out of Livorno, Italy, for receivers in Nigeria. It was suggested that this cargo was priced at a “special” discount of between $80-$100 per ton since it was completely loaded before Dec. 31, thereby removing a large slug of material from year-end inventory.

The lower end of Group I exports is modified to account for these levels, although the discounts have not been confirmed. Still reported only as indications, prices are assessed at $875/t-$955/t for SN150, $925/t-$1,010/t for SN500 and $1,030/t-$1,085/t for bright stock.

Base oil sales within Europe have stopped for the holiday period and markets there are very quiet. Many companies are closed for a couple of weeks. Some blenders have staff in offices between Christmas and January, but many are out of station until the end of the year. Sources said January prices were agreed before the break-up for the Christmas holidays, but many players said numbers are similar to those applying to December offtakes.

According to these accounts, typical values for intra-regional sales of SN150 are now heard to be at €1,065/t-€1,100/t, SN500 at €1,185/t-€1,245/t and bright stock, where available, at around €1,455/t.

The euro’s value against the U.S. greenback is steady this week at $1.0622.

The price differential between exports and sales within the region is maintained for the moment at €175/t-€425/t, exports being lower. These amounts are extreme due to high level of intra-regional prices.

Group II base oil prices are stable but show signs of weakening. Negotiations are ongoing to establish price levels for January and forward.

There is evidence of Group II demand in the region waning. Some players suggest that this is a temporary phase and that demand will return by the middle of 2023, but others predict demand will not fully return until the fighting in Ukraine is resolved – which could take a long time.

Group II prices are unchanged at $1,265/t-$1,407/t (€1,200/t-€1,335/t) for 100 neutral, 150N and 220N and at $1,410/t-$1,460/t (€1,335/t-€1,385/t) for 600N. These values apply to a range of Group II oils from Europe, the U.S., Asia-Pacific and the Middle East Gulf.

Group III base oil markets around Europe remain relatively tight since availabilities are limitled. Prices are however seen to be slightly weaker, perhaps due to movements in the Group I and Group II sectors.

Values for Group III oils with partial slates of approvals are taken slightly lower to €1,700/t-€1,735/t for 4 and 6 centiStoke and to €1,675/t-€1,725/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for Group III oils with full slates of approvals are also adjusted downwards to €1,755/t-€1,800/t for 4 cSt and to €1,770/t-€1,820/t for 6 and 8 cSt, again on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam or Northwestern Europe.

Baltic and Black Seas

Baltic reports indicate that few cargoes are loading or are due to load out of the main ports of Riga, Liepaja and Klaipeda. Even Svetly in Kaliningrad is quiet in comparison to the days prior to the Ukraine invasion. Russian exports were badly dented by the renegade action by Putin and may never recover to existing levels, even after a Ukraine liberation.

There is one inquiry for 5,000 tons to load out of Svetly on a prompt basis, but there may be problems obtaining suitable shipping to perform this voyage to Hamriyah in the United Arab Emirates. Supply of Russian export barrels has previously been made using supplies from Volgograd refinery, then trans-shipping through Limas terminal in Marmaris.

There are a couple of interesting shipping inquiries. The first is for up to 8,000 tons of recycled base oils to load either for the west coast of India or Jebel Ali in the U.A.E. The others are for two vessels to load out of Aabenraa in Denmark for two cargoes. One is bound for Turkey, whilst the second of 8,000 tons of base oils is for Hamriyah port. The charterer is unknown, but this location has not been utilized to load base oils up until present.

FOB prices from Svetly for SN 150, and as an indication only, are assessed at $825/t-$855/t, with SN 500 at $845/t-$890/t.
Gdansk has availabilities, with one cargo of 3,250 tons loading for Antwerp and then Tarragona in Spain.

FOB prices from Gdansk are in line with European mainstream numbers. As an indication only, SN 150 is at $895/t-$955/t, with SN 500 at $945/t-$1,010/t. Bright stock is assessed at $1,035/t-$1,100/t.

Black Sea regions show a number of Russian cargoes going into the Turkish market. These are still coming out of Volgograd, apparently, with the Volga River system still navigable. However, there is an inquiry to load out of Novorossiysk for 6,000 tons of base oils. This loading from Novo may indicate that the river Volga is iced, and supplies of Russian exports are coming out of Volgograd by truck, stored in Novo.

Turkish refiner, Tupras, with the refinery at Izmir, has offered Group l base oils at prices that are acceptable for the Turkish market. Levels are at $889/t for SN 150 and $1,035/t for SN 500, with bright stock at $1,250/t. These prices are for truck loads ex refinery purchased in Turkish lira.
Turkish buyers are looking at a potential cargo from Aghio for January, but prices are still higher than ideal. Offers for Mediterranean barrels are heard to be $1,020/t-$1,035/t for quantities of SN 150, with SN 500 and SN 600 at around $1,055/t-$1,075/t. Indications for bright stock from Livorno could be around $1,125/t-$1,155/t basis CIF Gebze or Derince.
Imported Group II prices on an ex-tank basis are maintained and assessed at €1,485/t-€1,565/t for the three lower vis products, with 600N at €1,590/t-€1,640/t.

Group III base oils also sold on an FCA basis for partly-approved grades, remain at €1,765/t-€1,800/t. Fully-approved Group III grades delivered into Gebze from Cartagena in Spain are priced at around €1,795/t-€1,855/t on an FCA Gebze basis.

Middle East

Red Sea schedules have one large cargo of 19,000 tons of Group I and Group II base oils loading from Yanbu and Jeddah, supplying receivers in the U.A.E. The cargo will be delivered into three ports – Fujairah, Hamriyah and finally Jebel Ali. The only other specified cargoes are a small parcel of 1,800 tons for Singapore and a further 3,000 tons of bright stock for Egyptian General Petroleum Corp. in Alexandria.

Middle East Gulf receivers are looking at various options to take cargoes of Group I base stocks. Europe and the United States are options on the list in addition to Baltic and Black Sea sources for Russian barrels. The problems appear to lie with the high freight costs of moving cargoes from those sources, with some buyers in the U.A.E. looking to take material from Asia-Pacific as an alternative.

A European-sourced cargo of 10,700 tons coming out of Rotterdam and Fawley will load around mid-January. The voyage will include calling at Yanbu, then Fujairah and finally Jebel Ali in the U.A.E.

Quantities of Group III base oils will load out of Sitra for Bapco and Stasco, and Al Ruwais for Adnoc, with the latter moving a cargo of 6,000 tons to Mumbai. The former supplier, Bapco, will load a large cargo of 16,000 tons for receivers in the west coast of India. Both cargoes will load during the early part of January. These cargoes are in addition to the parcels that will arrive in Europe, the U.A.E. and China during the next few weeks.

The large parcel of 29,000 tons of Group III+ base oils from Ras Laffan in Qatar has loaded and will call into the Mediterranean and also Antwerp-Rotterdam-Amsterdam. This cargo will go into the Shell system.

Netbacks for partly-approved and non-approved Group III base oils loading out of Al Ruwais and Sitra are maintained and assessed at $1,690/t-$1,725/t for the range of 4 centiStoke, 6 cSt and 8 cSt partly-approved Group III base oils.

Netback levels are based on local FCA prices in markets such as Europe, India, the U.S. and China. They are derived and assessed from regional selling prices, less marketing, handling and estimated freight costs.
Group II base oils selling on a FCA basis in the U.A.E. can be sourced out of European, U.S, Asia-Pacific and Red Sea producers and are resold ex-tank or often on a truck-delivered basis within the U.A.E. Prices are maintained with levels at $1,540/t-$1,575/t for the light vis grades, with 500N and 600N at $1,600/t-$1,670/t. The high ends of the ranges refer to road tank wagon-delivered base oils.

Africa

South African sources confirm a further cargo of 25,000 tons of various base oils and chemicals that will load out of Rotterdam and Fawley during the latter part of January. The vessel will call at Tema in Ghana with around 5,000 tons of three Group I grades – SN 150, SN 500 and bright stock. The vessel will then sail to Durban with the balance of the cargo for discharge into that port.

In West Africa the same supplier will also load a second cargo of up to 6,000 tons for regular receivers in Conakry in Guinea and Abidjan in Cote d’Ivoire. It is imagined that the total quantity of Group I grades will be split between the two discharge ports.

There seems to be some glimmer of hope for the Nigerian base oil market with the notification that an 11,000-ton parcel of three Group I base oils will load out of Livorno for delivery into West Africa. It is assumed that this cargo is allocated to receivers in Lagos, who must have been able to have their local bank open a letter of credit in favor of traders for the amount of the purchase.
The market must be now extremely short of base oils. This cargo will be a boost and an addition to the 12,000-ton Baltic cargo that should arrive in Apapa soon.

CFR levels for base oils to going into Apapa remain unchanged. However, numbers are indications only. It should also be mentioned that Russian price levels are exceptionally keen and competing against these numbers with regular Group I supplies from Livorno could have been difficult. It is believed that a “special” deal was struck to take the large quantity out of stock in Livorno prior to the year’s end and the accountancy cut-off.

Levels are advised as indications only, with freight costs accounting for a substantial part of the final prices. Prices are placed at around $1,085/t for SN 150, SN 500 at around $1,120/t and SN 900 at $1,165/t. Also, as an indication, bright stock from Livorno is assessed at around $1,245/t CFR Apapa.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly at pumacrown@email.com.

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.

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