To an extent base oil price levels are always relative to raw material costs and prices. At the moment, base oil and finished lubricant demand remain elusive in many markets as many large economies languishing in the doldrums with few signs of positive growth emerging.

All is not gloom, however, as some regional markets are seeing upswings in a number of industrial and commercial sectors. Growing demand in many African regions offsets lackluster activity in European markets, whilst the Middle East is on course for economic development in countries such as Saudi Arabia and the United Arab Emirates.

The wars in Ukraine and Gaza still hang over the industry, but they have inspired base oil and lubricant businesses to innovate and work around supply chain disruptions. The regions have been mostly quiet the past few weeks with little commercial activity. Many key players are on holiday and are missing from their desks, but contacts will start returning to offices towards the end of next week.

Commentators have suggested that buying activity could pick up moving into September because a number of large blending operations ran down inventories prior to the summer recess – perhaps gambling that prices would drop in the autumn.

Crude and Gasoil Prices

This assessment could prove to be right if crude and petroleum product prices continue to soften in coming weeks. Premia for all types of base oil remain positive versus diesel and other distillates, incentivizing producers to maximize output of base stocks as long as buyers continue to purchase them. Should demand falter, then production may be cut, altering refiners’ slates across the region. Base oil prices remain around the same levels arrived at in late July, since with little pressure evident.

Last week’s meeting between United States and Russian presidents

Donald Trump and Vladimir Putin had little effect on crude prices, which were hardly changed from last week. Analysts are still predicting crude will fall, but timing remains open to conjecture.

Dated deliveries of Brent crude: $66.20 per barrel, October front month settlement
West Texas Intermediate: $63.10/bbl, September front month
European low-sulfur gasoil: $652 per metric ton, September front month
Source: London ICE late Aug. 18

Europe

European API Group I prices have remained stable since the start of the holiday period at the beginning of August, and show few signs of moving off a steady course. The markets around Europe remain quiet.

Some contacts have sent messages from holiday locations reinforcing the ideas that the situation will probably continue until September unless some dramatic events occur.

Negotiations to end the war in Ukraine have increased. Should a peace solution be met, the outcome will start to reshape the dynamics around Ukraine and Eastern Europe, but until details are released, everything remains on hold.

Group I Prices, Rotterdam, FCA basis
SN150: $980, unchanged

SN500: $1,010/t, unchanged
Bright stock: lower at $1,375/t-$1,425/t

Pan-European, FOB basis
SN150: €800/t-€825/t, unchanged
SN500/600: €860/t-€900/t, unchanged
Bright stock: €1,275/t-€1,320/t, unchanged

Euro price to U.S. dollar: $1.16705

Group II prices remain in the same ballpark as previously reported, with few reports of changes and prices tending the remain in force for the month of August. Sources available for comment this week still expressed the view that the differential between Group I and Group II is relatively narrow.

European levels, whilst higher than other regions, have relented a little and are now closer to those in the U.S. and Asia-Pacific.

Group II prices, FCA basis
110N/150N: €950/t-€995/t, unchanged
220N: €1,015/t-€1,045/t, unchanged
600N: €1,120/t-€1,150/t, unchanged

These values apply to a wide range of Group II base oils from Europe, the U.S., the Red Sea and Asia-Pacific. For imports the ranges refer to bulk shipments, though smaller quantities are also transported in flexi-tanks.

With cargoes arriving into European hubs to replenish depleted inventories, Group III demand remains firm, though availability of 4 centiStoke is limited. Quantities arriving have been presold to regular customers, so buyers are negotiating future purchases on the basis of additional cargoes scheduled in the next couple of months.

All Middle East Gulf sources are now operating at full capacity, and their appointed distributors are steadily arranging shipments to Europe. Vessels are still being routed around the Cape of Good Hope due to the potential Houthi attacks on shipping, thus voyage times are taking longer than previously, when vessels transited the Red Sea and Suez canal.

Group III prices, partial slates of approvals, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe
4 and 6 cSt: €1,085/t-€1,120/t, unchanged
8 cSt: €1,125/t-€1,140/t, unchanged

Fully approved, FCA Antwerp-Rotterdam-Amsterdam, Northwestern Europe, Spain
4 and 6 cSt: €1,695/t-€1,725/t, unchanged
8 cst: €1,745/t-€1,760/t, unchanged

Where sold on a delivered basis, a premium covering transport costs will be added to the above prices.

Rerefined Group III, FCA Germany
4 and 6 cSt: $1,035/t-$1,075/t, unchanged

Baltic Sea

Group l and Group ll European base oils are being delivered into Baltic states mainly by road tanker, but there have been some small cargoes moved by sea into ports such as Riga and Liepaja, Latvia.

Information about Baltic prices for Russian Group I exports is still difficult to obtain, but information can be gleaned from cargoes of the same discharging in other countries, for example Turkey and Nigeria, where CIF or CFR prices are disclosed by customs or shipping agents. Factoring in estimated freight rates and other rates can yield ballpark FOB prices.

Based on the latest cargo which arrived into Gebze, Turkey, during the first half of August, notional FOB prices ex St. Petersburg are indicated around $750/t-$775/t for SN150 and $780/t-$795/t for SN500.

Black Sea & Turkey

Turkish buyers still try to access U.S. Group I barrels through a couple traders with contacts along the U.S. Gulf of Mexico and East coasts. Information from third parties suggests negotiations on price continue. Shipping costs would be high for a relatively small parcel of around 5,000 tons of SN150, SN500 and bright stock.

Shipping in flexies could be part of the solution, but if bright stock is included it would have to be heated, which could complicate the shipment and increase cost.

Russian base oils continue to be the staple import into Turkey, but the Turkish market is currently very slow.

Turkey prices

Russian Group I from Rosneft and Bashneft, CIF/CFR Gebze
SN150: around $910/t, unchanged
SN500: around $925/t, unchanged

Tupras Group I, ex rack Izmir refinery
Spindle oil: Tl 35,447/t plus Tl 8,986.84/t duty, unchanged
SN150: Tl 30,261/t plus Tl 97,949.64/t duty, unchanged
SN500: Tl 34,204/t plus Tl 8,738.24/t duty, unchanged
Bright stock: Tl 52,506/t plus Tl 12,398.64/t duty, unchanged

Spindle oil and SN150 prices valid from July 31, SN500 and bright stock prices from July 10. Sales also incur a standard loading charge of Tl 9,487.20/t.

There have been no new offers for Group ll base oils this week, but contacts have said that new prices will be available from next week.

Group II, ex-works Turkish trader
110N and 220N, Russian origin: $1,100/t, unchanged
350N, blended or from another source: $1,275/t, unchanged
150N, from Taiwan or Saudi Arabia: $1,275/t, unchanged
500N/600N, from Taiwan or Saudi Arabia: $1,595/t, unchanged

Partly approved Group III
4 cSt from Tatneft, FCA: €1,295/t, unchanged
4 and 6 cSt, other sources, perhaps unavailable: €1,375/t-€1,400/t, unchanged

Fully-approved Group III from Spain, CIF Gemlik
€1,825/t-€1,855/t. , unchanged

Middle East

Shipping reports suggest cargoes will resume loading from Yanbu and Jeddah, Saudi Arabia, toward the end of this month and into September, with a number of vessels required for large parcels of up to 20,000 tons of both Group I and Group II base oils.

Cargoes are being assembled for the West Coast of India and Chennai, and also for the UAE ports of Fujairah, Hamriyah and Jebel Ali. A number of the vessels will discharge at two or even three ports.

No more news is heard regarding the possible cargoes of Group I and Group II base oils for European resale. There are no vessel inquiries for such cargoes to be loaded during the next few weeks.

UAE buyers will be receiving Group l and Group ll cargoes from Luberef out of Yanbu and Jeddah over the next few weeks. Arrivals will start around mid- to late September, with a couple of receivers currently in U.K. confirming that they will take delivery of large Group II quantities from this source.

There have been no reported base oil cargoes moving out of Iranian ports, but significant quantities of rubber process oil are being exported from the country. RPO is delivered into Ras al Khaimah, UAE, in relatively small quantities, and when around 3,000 has amassed the material is loaded and sailed to Haldia, India, or Ulsan, South Korea.

Base oils are being delivered into a number of UAE ports depending on API group. For example, Group I oils are purchased from traders in the U.S., Europe and the UAE and delivered into ports such as Fujairah and Hamriyah.

Group I, CIF/CFR UAE ports
SN150: $925/t-$940/t, unchanged
SN500: $985/t-$1,020/t, unchanged
Bright stock: $1,345/t-$1,370/t, unchanged

Group ll base oils imported into the UAE from the Red Sea, the U.S., South Korea, Europe and Singapore.

Group II, FCA or on an RTW basis UAE and Oman
110N, 150N and 220N: $1,425/t-$1,475/t, unchanged
600N: $1,510/t-$1,555/t, unchanged

The highs of the ranges refer to RTW deliveries to buyers in UAE and northern Oman. Sales are conducted in UAE dirhams or U.S. dollars. The UAE currency is pegged to the dollar at AED 3.67 = $1.

Group lll base oils sourced from Al Ruwais, UAE, and Sitra, Bahrain, are delivered into Sharjah, UAE, then offered for resale through an appointed distributor rather than on a direct basis from Adnoc or Bapco. Buyers tend to remain loyal to one of the sources.

Group III, FCA Hamriyah or RTW in the UAE and Oman
4 cSt: $1,385/t, unchanged
6 cSt: $1,400/t, unchanged
8 cSt: $1,420/t, unchanged

Group III prices include a reseller margin of around $75/t to cover storage, handling and operating margin. RTW deliveries incur a charge of $20/t-$55/t.

Group III cargoes from Al Ruwais and Sitra are also loading for shipment to the U.S., Europe, India and China, and receivers in Thailand have taken a couple cargoes from Al Ruwais. It is not clear if a trader was involved in this transaction or if the deal was done directly between the Thai receiver and Adnoc.

Netbacks on these shipments are unchanged, indicated at $1,270/t-$1,300/t for 4, 6 and 8 cSt. These levels may reflect prices from producers to the various distributors buying on an FOB basis.

Netbacks for gas-to-liquids Group III+ base oils loading ex Ras Laffan, Qatar, are estimated to be between $1,255/t-$1,290/t. Numbers are given as indications only, since there are no distributors involved in this trade and supplier Shell does not disclose information.

Netbacks are calculated using distributor selling prices in known markets, less estimated marketing costs, margins, handling, storage and freight.

Africa

A cargo of around 3,000 tons will deliver bright stock into storage in Alexandria, Egypt. The cargo was loaded out of Yanbu, fulfilling the obligation to supply this grade under the EGPC tender contract.

The large base oil cargo reported destined for Durban, South Africa, is believed to be loading from Rotterdam and Fawley, U.K., and will consist of around 18,000 tons of Group I, II and III and a small parcel of easy chemicals.

West African sources report a cargo of base oils that will load out of Fawley and discharge into three ports: Conakry, Guinea; Abidjan, Cote d’Ivoire; and Tema, Ghana.

In Nigeria, sellers continue offering discounts in order to move material out of tank. The rainy season will be coming to an end soon, allowing transportation to get back to normal for base oils being sent long distances to remote blending plants in the northern part of the country.

Nigerian buyers are expecting to purchase cargoes from sources in the U.S. through traders based in Switzerland. Additionally, other receivers are approaching Russian traders to negotiate cargoes from the Baltic or the Black Sea via transhipments through Egypt or Turkey.

Some buyers are being told that their price expectations are unrealistic and cannot be achieved by traders trying to purchase large cargoes out of the U.S. Gulf or East coasts. FOB numbers in the U.S. have risen since May or June, and whilst it may be possible to purchase a cargo from one of more sources to get to the quantities being sought, the price of bright stock is higher, hence blends of SN900 is much more expensive.

The Nigerian naira’s black market exchange rate to dollars is NGN 1,540.

Nigerian Group I prices, CFR Apapa

U.S. base oils
SN150: $890/t-$910/t, unchanged
SN500: $920/t-$940/t, unchanged
SN900: $1,040/t-$1070/t, unchanged

Russian base oils
SN150: $895/t, up $10
SN500: $940/t
SN900: $995/t, unchanged

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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