EMEA Base Oil Price Report


Many base oil suppliers find themselves between a rock and a hard place this week as efforts to hike selling prices have been thwarted by falling demand and plentiful availabilities.

Markets have started to move longer, making it difficult for sellers to cover increases in raw material costs. The delta between API Group I solvent neutral 500 and diesel prices in Europe is the smallest for years and has prompted some refiners to shift production from base oil to diesel.

Some refiners who are able to produce bright stock have tweaked the system to increase quantities of this grade, but traditional export markets for large quantities of this grade are weak at this time since receivers can turn to alternative sources.

Pressure on producers eased when crude costs fell back the past week, with dated deliveries of Brent slipping below the $80 per barrel line. This crude now posts at $79.60 per barrel for December front month, while West Texas Intermediate stands at $69.05/bbl, still for November settlement. Oddly ICE LS gas oil moved in the opposite direction, climbing to $715 per metric ton for November front month. These prices were established late Monday from London ICE trading.


Group I base oil prices for export sales throughout Europe seem stable at best this week. Sentiment is weakening, but prices were mostly held steady by sellers who basically cannot afford to let them dip further. Light solvent neutrals remained between $685/t and $710/t, while SN500 and SN600 fell around $10/t to $710/t-$735/t. Bright stock is unaltered at $885/t-$910/t, although there were rumors of prices $25 to $30 lower being discussed for a couple potential sales. It is not yet clear as whether these are offered prices or counter-offers from buyers.

The prices above refer to large cargo-sized parcels of Group I sold on an FOB basis ex mainland European supply points, always subject to availability.

Prices for Group I sales within Europe are unchanged this week. It may be fair to say that a glut exists for some grades and that lubricant blenders have many options for who to buy from and when to purchase. Nevertheless, several buyers dispelled the notion of Group I base oils being finished, stating that they will continue using Group I stocks for the foreseeable future for a number of applications, rather than switch to Group II. Some of these blenders cited cheaper prices for Group I.

The differential between intra-regional and export values for Group I oils is generally maintained this week with exports being 45/t-100/t cheaper.

All suggestion of Group II importers raising prices in source markets appears to have halted, and some Group II oils now face downward pressure similar to Group I grades. The picture is unclear, though, as some buyers reported achieving small markdowns for November, while others said sellers had proposed maintaining the status quo until the end of the year. Availabilities appear to be excellent, and sellers said they expect that to continue next year due to the opening of the new ExxonMobil plant in Rotterdam.

Prices are unchanged this week at $885/t-$930/t (755/t-795) for 100 neutral, 150N and 220N and $965/t-$985/t (825/t-830) for 500N and 600N for FCA sales or barge and truck deliveries.

Group III prices are generally stable, though a few sellers are reportedly pushing for increases from Nov. 1. Other players predicted that values will stay unaltered through until next spring. FCA euro prices for oils with partial slates of finished lubricant approvals are unchanged at 765/t-770/t ($885/t-$895) for 4 centiStoke grades, 775/t-780/t ($900/t-$910/t) for 6 cSt and 785/t-790/t ($910/t-$920/t) for 8 cSt.

Group III oils holding full slates of European approvals rose slightly to 820/t-840/t for 4 cSt grades, 840/t-885/t for 6 cSt and 825/t-840/t for 8 cSt, all on an FCA basis Antwerp-Rotterdam-Amsterdam. Values bulk deliveries to larger users may be considerably lower.

Baltic and Black Seas

Baltic sellers are looking at various new markets to place their quotas of Russian exports and have succeeded in moving quantities to South America, North Africa and the Far East, both directly and through traders. Also up for trial are cargoes into the West Coast of India and the United Arab Emirates, but these discharge locations are still under review with tentative offers being made to receivers and traders.

A couple of notable 5,000 tons cargoes have moved from the Baltic linking up with other supplies by either two-port loading or STS transfer. Other more routine movements are again noted for Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom, all maintaining the presence of Baltic supplies in the mainstream European Group I market.

FOB prices remain unchanged at around $640/t-$670/t for SN150 and $665/t-$695/t for SN500. SN900 is at $725/t, and bright stock with viscosity index of at least 90 ex southern Baltic remain at $865/t-$880/t, basis FOB.

Black Sea reports still center around the Turkish market, which was a hub before the latest economic crisis in the country. Turkish blenders are finding it difficult to afford imported base oils, which would necessarily increase prices for finished lubricants being made for the local market and for the large quantities that the country exports. With no obvious solution to the economic problems within Turkey, activity is minimal and some blending operations are winding down.

A few Group I cargoes from Europe are still moving from Greece into Derince and Gebze with prices that have been pared down as much as possible. Values for one cargo are assessed at $725/t-$740/t for light solvent neutrals and $755/t-$780/t for SN600 and SN500, basis CIF Turkish ports.

The latest news on STS exports from Kavkaz, Russia, is that some 15,000 tons will be loading around the last week of October destined for the United Arab Emirates and also Far East. The relative quantities for each discharge port are not released, but history suggests the larger part of the cargo will go into a Far East location, perhaps Singapore. SN500 is priced at around $585/t, basis loading STS Kavkaz.

Middle East Gulf

Red Sea reports describe large cargoes of Group I and Group II loading out of Yanbual Bahr and Jeddah, Saudi Arabia, with almost 50,000 tons of base oils being booked to land into Mumbai, Mumbai anchorage and other the West Coast ports, as well as smaller quantities in partial cargoes being allocated to receivers in U.A.E. Cargo sizes have grown from these locations, and it is now not unusual to identify parcels of 10,000 to 20,000 tons being moved on this route.

Iranian sellers continue to trade base oils out to Mumbai using Iranian flagged vessels that are now appearing regularly on this route. With the next tranche of U.S. sanctions about to commence next week, local receivers in U.A.E. have been making provisional plans for supplies of Group I grades coming from alternative sources such as the Baltic, the Black Sea, the U.S. Gulf Coast and the U.S. East Coast. European options may also be open under arbitrage, with FOB plus freight levels now becoming competitive.

Still, sources said that even the new sanctions will not curb the exports of base oils from Iranian ports, although receivers are under pressure from U.S. authorities to cease purchases of all petroleum products and crude oil from Iran. Iran just sold around 40 million barrels of crude to China, which may be a snub to the U.S.

Prices for Iranian SN500 grade are now assessed at $775/t-$795/t on a netback basis for deliveries to Indias West Coast, basis FOB.

Notional FOB prices for Group III exports from Al Ruwais, U.A.E., and Sitra, Bahrain, are unchanged this week. Large quantities of Group III grades were identified loading out of Al Ruwais, with more than 50,000 tons possibly being shipped during October. One parcel of around 20,000 tons is under offer to receivers just along the coast in Sharjah, U.A.E., where large quantities of either Group III or Group II base oils are used to make transformer oils.

Notional FOB values remain at $810/t-$845/t FOB Al Ruwais and Sitra for 4 and 6 cSt oils with partlial slates of approvals. Fully approved base oils sold by Neste under the Nexbase brand, which also come from the Sitra refinery, are estimated to netback at $865/t-$895/t for 4, 6 and 8 cSt material moving to European and U.S. markets. The same 8 cSt material is also being exported to India or Far East destinations at lower netbacks.

These prices are established using published freight rates, advised local selling prices and notifications of bulk CIF/CFR cargo prices from various sources.

Cargoes of Group II base oils are under offer moving into Middle East Gulf markets from Far East and Red Sea suppliers. Some large shipments are one-offs while others are being moved by major suppliers for break-bulk operations that entail portions being sold locally on an FCA basis or delivered by truck or flexitank. Prices are unchanged at $1,055/t-$1,095/t for 100N, 150N and 220N and $1,125/t-$1,165/t for 500N and 600N. These prices refer to quantities of less than 25,000 tons delivered to the Middle East Gulf and then sold in parcels of up to 300 tons.


West African receivers have covered a requirement loading bright stock out of a southern Baltic port and topping off with further quantities of Group I heavy solvent neutrals out of Northwestern Europe for a total quantity of some 13,000 tons moving into Apapa port in Lagos around mid-November. The Baltic is also a potential source for another cargo of around 20,000 tons that is still under consideration.

Other material for alternative West Africa markets in Ghana, Cote d’Ivoire and Guinea is also being worked for loading during the first half of November, and as was done with this supply last time around, the three loactions may be combined, offering economies of scale on the freight angle for all concerned. However, the Ghana contracted supply is made against index-linked pricing so that combining with other requirements is only in the interest of the seller.

Offered prices for material into Apapa port are unchanged this week at $695/t-$745/t for light solvent neutrals ranging from SN150 to SN180, $730/t-$775/t for SN500, SN600 and SN650, and $925/t-$965/t for bright stock. SN900 ex Baltic, is assessed at $825/t-$865/t, CIF/CFR.

These prices are for large parcels in excess of 10,000 tons of Group I delivered on a CFR or CIF basis into Apapa.

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

Related Topics

Base Oil Reports    Base Stocks    Other