Group III levels appear to remain relatively stable, but in key markets such as India, sellers have had to make concessions on prices to be able to make prompt sales. In Europe, Group III prices remain steady, with no reported surpluses of availabilities around the market.

Middle East Gulf regions are seeing increasing cargoes of Group I and Group II coming in from Asia-Pacific and the U.S., with receivers increasingly looking for premium base oils rather than remaining reliant on Group I grades. Russian cargoes have all but disappeared from the United Arab Emirates, perhaps indicating the supply problems being experienced in the Russian domestic markets.

Crude and Gas Oil Prices

Crude prices rallied in response to the potential supply and production issues in Russia, and also to possible Trump sanctions and tariffs being imposed on countries importing large quantities of Russian crude. Both China and India have indicated that they are taking steps to limit to import of sea-going cargoes for their national oil companies. Reliance in India announced it will curb the quantities of Russian crude being used in their huge petro complex at Jamnaghar.

However, a large number of China’s smaller refiners, called teapot buyers, will continue to purchase Russian supplies of crude oil which are coming into the country by pipeline and rail.

Prices for Brent crude rose almost $6 per barrel from last week, while West Texas Intermediate was up around $5. Low-sulfur gasoil values jumped around $100 per metric ton.

Dated deliveries of Brent crude: $66.00/bbl, December front month
West Texas Intermediate: $61.70/bbl, November front month
European low-sulfur gasoil: $736/t, November front month
Source: London ICE late, Oct. 27.

Europe

Substantial inventories are building at a number of Group I refineries, raising issues as to how to move late quantities of European Group I base oils on a prompt basis.

Most companies are investigating export possibilities, but many of the traditional markets are unavailable at this time because transportation costs would still be elevated since many ship operators continue to journey around Africa’s southern tip rather than chance the Red Sea and the Suez Canal.

Whether by luck or timing, there may be opportunities for exporters to look at the Turkish market, where a sudden dearth of Russian base oils has developed, perhaps due to supply refinery disruptions in Russia.

Other buyers in North Africa may also be worth looking into, but the quantities required going into these receivers are smaller than deep-sea export destinations.

West African markets are covered by alternative sources, some of which are based in Europe, but Nigeria has become dependent on Russian cargoes that were arranged prior to the supply problems now being experienced, or U.S. barrels, from suppliers who appear to be exceptionally keen to move large slugs of various base oils.

In Europe, bright stock remains short, and availability of large parcels of this grade are rare. Bright stock still holds a large premium over light and heavy solvent neutrals, where prices continue to fall.

Within a relatively short space of time, sellers have changed attitudes regarding looking at export markets, where FOB price levels have to be considerably lower than local or regional prices.

Group I

Export prices, FOB
SN150: $685/t-$720/t
SN500: $745/t-$855/t
Bright stock 150: $1,175/t-$1,200/t

Northwestern Europe, FCA basis Antwerp-Rotterdam-Amsterdam
SN150: $825/t-$860/t
SN500: $910/t-$955/t
Bright stock 150: $1,275/t-$1,340/t (wide range depending on location within mainland Europe)

Eastern Europe,  FCA, subject to local discounting
SN150: €934/t
SN500:  €1,008/t
Bright stock 150: €1,298/t

Pan-European, FOB/FCA basis
SN150: €700/t-€740/t
SN500/600: €775/t-€825/t
Bright stock 150: €1,120/t-€1,155/t

Pan-European prices are assessed on an aggregate basis from levels in Poland, Hungary, France, Germany, Benelux, Iberia, Italy, Greece and the United Kingdom.

The euro-U.S. dollar exchange rate was $1.16346 Monday.

European Group II prices are under downward pressure, partly because of an ever-growing differential between Group II and Group I prices. Just to clarify, Group II prices are not rising, but Group I levels are falling steadily.

European prices are still higher than in other regions such as Asia-Pacific and the U.S., incentivizing importers to prioritize the European market above others. One U.S. producer is undergoing a major turnaround, whist another appears to have containment problems and is heavily discounting FOB levels to move material out of tank.

The main protagonists in Europe are uniformly offering discounts or lower prices, but buyers are cautious, and with availabilities excellent buyers can purchase quantities as and when required rather than carry large stocks at a time when demand for finished lubricants is lacking.

Prices are adjusted lower to reflect reductions offered by major suppliers.

Group II, FCA basis
110N/150N: €875/t-€900/t
220N: €910/t-€935/t
600N: €1,025/t-€1,055/t

Prices refer to a wide range of Group II base oils which can be sourced from within Europe, U.S., Red Sea and Asia-Pacific. Ranges refer to bulk shipments. Smaller quantities can be imported in flexi-tanks.

Group III demand remains relatively strong, particularly for 4 centiStoke, closely followed by 6 cSt, which is also popular with European blenders. Eight cSt remains a niche grade, used in cutting fluids and other metalworking lubricants.

Sellers and distributors have stocks in tank after the steady arrival the past few weeks of a number of cargoes ranging from 5,000 tons to 10,000 tons. Some distributors are looking forward to further shipments before the end of this year.

There are still a number of inquiries for spot purchases, but this demand is receding, now that suppliers have available material.

The only seller still having problems is a South Korean supplier who maintains that there are still shipping delays for cargoes. A cargo has arrived, and has been allocated to buyers who have been waiting for some time. Another cargo is expected to dock in early November.

Houthi terrorists in Yemen are still warning that they remain hostile to Israel and will target ships deemed related to or owned by Israeli companies or individuals. As a result, Group III shipments from Asia-Pacific and the Middle East Gulf to Europe and the U.S. do not have the option to use the Suez Canal transit.

Group III
Oils with partial slates of finished lube approvals, FCA Antwerp-Rotterdam-Amsterdam Nnd northwestern Europe
4 and 6 cSt: €1,170/t-€1,190/t (one distributor offers at €1,040/t )
8 cSt: €1,125/t-€1,145/t

Fully-approved, FCA hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain
4 and 6 cSt: €1,645/t-€1,695/t
8 cSt: €1,710/t-€1,725/t

Product sold on a delivered basis will incur a charge covering transport costs, which will be added to the above prices.

Rerefined Group III prices are maintained at €885/t-€920/t for 4 and 6 cSt, FCA Germany. Please note that in recent reports the currency expressed was U.S. dollars. Euros is correct.

Baltic Sea

Group I base oils are being imported into Riga and Liepaja, Latvia. Group II product is also making inroads with blenders in Latvia and Lithuania. Group II and Group III supplies are not usually being shipped by sea but are brought into the Baltic by road tank wagon from sources in Antwerp-Rotterdam-Amsterdam-Germany.

Also popular with buyers in the Baltic States are redefined base oils from Kalundborg, Denmark, and rerefined Group III from Germany.

Russian base oils are still being made available in some regions of the Baltic, with rogue deliveries coming cross-border by road from Russia and Belarus. Such activity is in breach of EU sanctions.

Lukoil and Rosneft have been sanctioned by the U.S., and this action has contributed to a breakdown in the relations between Putin and Trump.

Lukoil base oil cargoes of around 3,000 tons are loaded on trains at the Perm, Russia, refinery, then are stored in St. Petersburg before being loaded onto ships. In the past most of these parcels ended up in Gebze, Turkey, but the frequency has fallen – perhaps because Ukraine attacks on Russian refineries is reducing base oil production. It might be assumed that availabilities of Russian barrels have been diverted into domestic markets, due to supply interruptions from other base oil producing units like Lukoil’s other base oil production site in Volgograd in the south of Russia.

Notional prices for Russian Group I exports, FOB St. Petersburg/Vyborg
SN150: $625/t-$655/t
SN500: $660/t-$685/t

Black Sea & Turkey

There are fewer Russian cargoes of base oils arriving into Turkey, with local sources commenting that material is being kept in-country for domestic customers. Ukraine has conducted several drone strikes the past few months on refineries that produce base oil, such as the Rosneft refinery at Novokuybyshevsk and the Bashneft refinery at Ufa.

Turkish buyers are looking at a quantity of 5,000 tons of SN500 from Greek suppliers, but prices in the offer are considered too high. Prices are being compared to Russian numbers from a couple of months ago. The last CIF/CFR levels heard for Rosneft base oils were at $590/t for SN150 and $655/t for SN500.

Lukoil prices from the Baltic had been around $100/t-$150/t higher, perhaps reflecting higher freight rates from the Baltic.

Base oil prices in Turkey are unchanged this week, with no reported cargoes arriving from Rosneft, ex-tank prices are in respect of stocks from previous cargoes which remain in tank.

Group I

Lukoil, CIF/CFR Gebze
SN150: around $835/t
SN500: around $850/t

Rosneft and Bashneft, CIF/CFR Gebze
SN150: $590/t

SN500: $655/t

Tupras Group I base oils are being advertised for sale ex rack Izmir refinery, but it is unclear whether there are availabilities of some or all of the grades. Prices are given on an indication basis only

Spindle oil: Tl 34,622.00/t plus VAT Tl 8,821.84/t
SN150: Tl 28,185.00/t plus VAT Tl 7,534.44/t
SN500: Tl 34,220.00/t plus VAT Tl 8,741.44/t
Bright stock: Tl 51,681.00/t plus  Tl 12,233.64/t

Sales incur a standard loading charge of Tl 9,487.20/t.

Group II, ex-works

110N and 220N, Russian origin: $975/t
350N, blended, or from alternative source: $1,135/t
150N, from Taiwan or Saudi Arabia: $1,020/t
500N/600N, from Taiwan or Saudi Arabia: $1,240/t

Group III

Partly-approved Tatneft 4cSt FCA: €796/t
Fully-approved from Spain, CIF Gemlik: €1,720/t/t-€1,785/t

Middle East

The Luberef refinery in Yanbu is in turnaround, but news regarding Septeber activity indicates fewer ships were loaded for India, which has also been importing Group II from Asia-Pacific. The UAE continued to receive a number of cargoes from Yanbu and Jeddah.

The drop in shipments from the two Saudi Arabian ports contrasted with a strong pick-up in Asia’s exports. September shipments from the two ports totaled more than 50,000 tons, and a higher portion than usual remained in the Middle East. That volume was down from more than 80,000 tons in August and from typical levels of close to 60,000 tons/month for the preceding 12 months.

There has been a steady and noticeable increase in the number of Group I and Group II base oil cargoes coming into the UAE and other Middle East Gulf ports during September and October. Vessels have arrived at Hamriyah, but continue to experience delays to berthing, as port authorities giving precedence to dry cargo vessels. Base oils cargoes have been sourced from the U.S. and Asia-Pacific. Vessels loaded with base oils are discharging more cargo into Fujairah and Jebel Ali to avoid delays and demurrage at Hamriyah.

European producers may consider export cargoes to the UAE, but cargo economics are heavily weighted against such shipments, given high freight costs incurred for the voyage around the Cape of Good Hope.

U.S.-sourced cargoes are a preferred option for Group I and Group II base oils moving into U.A.E. and India, rather than European-sourced material.

UAE sources said there have been fewer cargoes loading from Sepahan refinery in Iran for Indian receivers, with some sources postulating that Group I base oils are being delivered by road through Iraq and into Syria as alternative markets where prices are higher. Some also report material going into Afghanistan.

Group I, CIF/CFR UAE ports
SN150: $885/t-$920/t
SN500: $940/t-$965/t
Bright stock: $1,220/t-$1,245/t

Group I cargoes are purchased from traders based in the U.S. and Europe, some of whom have representation in the UAE.

Group II, FCA or RTW basis UAE and Oman
110N, 150N and 220N: $1,375/t-$1,395/t
600N: $1,455/t-$1,485/t

The high ends of the ranges refer to material being delivered by RTW around UAE and into northern Oman. Group II base oils are imported into the UAE from many sources, from the Red Sea, the U.S., South Korea, Europe and Singapore, and are resold FCA UAE, or on a truck-delivered basis throughout the UAE and Oman. Deliveries are made through local distributors who purchase base oils directly from Luberef in Saudi Arabia, and from U.S. and European majors and traders.

Group III, FCA Hamriyah or RTW UAE and Oman
4 centiStoke: $1,225/t
6 cSt: $1,235/t
8 cSt: $1,255/t

The ranges of Group III prices above include a reseller margin of around $75/t to cover storage, handling and margin. RTW deliveries from the distributor incur a further charge of between $20/t-$55/t, depending on delivery location.

Middle East Gulf Group III base oils produced in Al Ruwais, UAE, and Sitra, Bahrain, are delivered by sea into Hamriyah and Jebel Ali, UAE. These base oils are offered for resale through appointed distributors.

Netbacks for Group III base oils loading ex Sitra and Al Ruwais for distributor sales in Europe, the U.S. India and China are assessed slightly higher at $1,045/t-$1,075/t for 4, 6 and 8 cSt grades. Netback levels may indicate FOB prices.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, remain assessed at $1,085/t-$1,100/t. Levels are indications only since there are no distributors involved.

Middle East Gulf Group III netbacks are assessed using selling prices in known markets minus estimated marketing costs, margins, handling, storage and freight.

Africa

A bright stock cargo of around 3,000 tons was delivered from Yanbu to EGPC in Alexandria in Egypt.

A large base oil cargo has loaded from Rotterdam and Fawley during the past few days. On completion of loading, the vessel will sail directly to Durban, South Africa, for discharge. Charterers have employed the usual owners/operators for this regular voyage. The cargo will consist of around 18,500-20,000 tons of various base oils.

ExxonMobil will load a cargo of three Group I grades from Fawley, U.K., for receivers in West Africa. Five thousand tons will be delivered into Tema, Ghana, under the annual contract. Receivers in Abidjan, Cote d’Ivoire, and Conakry, Guinea, will take the balance.

Details of a 6,000-ton cargo loading from the U.S. Gulf Coast with Group II grades is still awaiting confirmation, but local sources say this will be targeted at a specific set of blenders capable of using premium base oils to produce high quality finished lubricants. The pricing on this parcel is not disclosed and is unknown, but it is reckoned that the FOB levels would have to come in at around $800/t to compete with Group I prices from Russia and the U.S. East Coast.

In Apapa port in Lagos, SN900 is scarce, and buyers are hesitant to purchase this grade because of what is seen as exceptionally high prices. When sourced from the U.S. or Europe, high viscosity bright stock is used in the blending of this grade, and with current high prices, SN900 can become too expensive for receivers to resell to local blenders in the Nigerian market.

Buyers are bidding at $880/t for SN150, $930/t in respect of SN500 and SN900 at around $1,060/t-$1,095/t, other traders are offering higher numbers at around $1,120/t.

Shipments arrived into Apapa with two Russian parcels and a cargo of around 8,000 tons in total from the U.S. East Coast. The first Russian cargo was smaller at 3,500 tons and discharged some time ago. The second Russian cargo would normally be around 10,000 tons of three grades, SN150, SN500 and SN900, possibly loading out of an Egyptian port.

Offers are at $900/t-$930/t for SN500 and $1,000/t-$1,025/t for SN900, on the basis of CFR Apapa.

The Nigerian naira black market exchange rate is NGN 1,484 to the dollar, as of Monday.

Group I prices, CFR Apapa

Russian origin
SN150: $860/t-$875/t
SN500: $885/t-$900/t
SN900: $1,060/t-$1,075/t

U.S. Origin
SN150: $965/t-$980/t
SN500: $1,020/t-$1,040/t
SN900: $1,095/t

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.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.