EMEA Base Oil Price Report


For its year-end finale the European, Middle Eastern and African base oil markets are throwing up some very unusual events that have made the market a mixed bag at this time.

The European API Group I market is showing considerable length of availability with for all grades, especially heavy neutrals though supply of bright stock appears balanced. Many of the cargoes identified have been intra-company movements with a large quantity of Group I grades moving from Northwestern Europe and the Mediterranean to Far East, for example.

The Group II scene is stable with some sellers trying to move prices slightly higher to offset exchange rate variances between a weaker euro and the dollar. Others appear satisfied to leave prices intact for December, perhaps concentrating on holding market position.

Variation pervades the Group III segment as fully-approved grades show signs of tightness whilst those with partial or no approvals are easily available.

Crude oil costs remain low, dated deliveries of Brent having dipped below $60 per barrel last week before recovering slightly. Analysts forecast prices staying basically steady into the first quarter of next year in spite of pledges by Russia and Saudi Arabia to trim production. Brent posted Monday at $60.90 per barrel for February front month, while West Texas Intermediate crude was at $52.85/bbl still for January settlement. ICE gas oil has fallen to $576 per metric ton for December front month. All of these prices are taken from late ICE trading in London Monday.


European Group I export prices are unchanged this week with few signs of panic selling to clear inventories, although there are rumors that a few sellers are prepared to offer ‘special deals’ for one-off, prompt loading sales. The fact is that there are very few inquiries for larger quantities of API Group I material to move out of the region.

Prices for light solvent neutrals remain between $615/t and $645/t, with SN500 and SN600 offered at $645/t-$665/t. Bright stock rallied a little this week, or at least has not shown the same degree of weakness as solvent neutrals, with offered prices heard at $810/t-$840/t. A couple Group I producers indicated they may be considering offering large parcels to traders for the second half of December at extremely ‘competitive’ prices, but these numbers have yet to be confirmed.

The above price levels apply to large cargo-sized parcels of Group I base oils sold on an FOB ex mainland European supply points.

Group I domestic prices throughout Europe show signs of downward pressure for December. There are not many buyers around in the market at the moment anyway, with many blending operations relying on current stocks to see them through until January.

The decline in local prices has not been so severe as some were forecasting during the latter few days of November. One major supplier said accounting procedures have changed over time, and there is no longer the need to reduce inventories at year end, hence eliminating the need for heavy discounts.

The differential between local prices and export numbers remains almost as previously advised, but with a small reduction at the top end of the spread. Domestic prices are therefore assessed 65/t-95/t higher than exports.

Group II supplies, as mentioned above, are showing variations from one supplier to the next. Some distributors are pushing for slight increases whilst other are content with current levels. Increasing prices in the current market and at this time of year may prove difficult, with buyers’ refusals to accept these increments.

Prices are maintained here until effects from movements can be assessed, with FCA and truck- or barge-delivered prices for 100N, 150N and 220N at $885/t-$930/t (775/t-815) and 500N and 600N at $960/t-$1,000/t (840/t-875).

The Group III segment is increasingly divided between those oils having full slates European finished product approvals and those with only partial slates of approvals. The price differential between the two sets of products is widening due to a perceived tightening of availabilities for fully-approved grades and wide availability partially approved varieties. Some sources iof the former are looking at major turnarounds in the early part of next year, and whilst all contract volumes can be covered from stocks or alternative sourcing, the combination of these turnarounds may limit any expansion in this part of the Group III market.

Values for oils with partial slates of approvals remain 740/t-760/t for 4 centiStoke grades, 760/t-780/t for 6 cSt and 780/t-800/t for 8 cSt. Group III stocks with ACEA and European OEM approvals crept up to 860/t-880/t for 4, 885/t-910/t for 6 cSt and 855/t-885/t for 8 cSt, all on an FCA basis from Antwerp-Rotterdam-Amsterdam.

The numbers above do not reflect prices for material which is delivered in bulk cargoes to large or major buyers, which may be lower.

Baltic and Black Seas

Baltic trade is dull with few spots of life. Many distributors and resellers have elected not to purchase December allocations from Russian refineries, perhaps because of high inventories, but also because demand has increased within the Russian Federation. Suppliers with contractual commitments in mainland Europe, Scandinavia and the United Kingdom will continue to meet them, but large spot trades to export destinations appear to be off the agenda, at least until after the new year.

Cargoes marked for Antwerp-Rotterdam-Amsterdam and the east coast of the U.K. are in place for December delivery, but blenders in Northwestern Europe are reducing stocks, and with the holiday period approaching, trades will be slack until January.

Prices for SN500 are slightly lower this week, although SN150 grades appear to be holding up, perhaps due to less of these grades being available ex mainstream supply sources in Northwestern Europe. FOB levels are pitched around $590/t-$610/t for SN150, while SN500 fell slightly to $600/t-$620/t. Bright stock ex the southern Baltic remains at $795/t-$820/t.

Within the Black Sea and East Mediterranean regions, trading is almost non-existent as few if any Russian cargoes are being exported from Azov, Russia. In Turkey one of the main markets within the region, there is confusion due to sudden, steep markdowns at the end of November for domestically produced Group I. The result has been a temporary halt to any movement of spot cargoes from Mediterranean sources in Greece, Italy or Spain.

European Mediterranean Group I base oils continue to be offered into Turkey, although there are also reports that some of the traditional buyers are not in a financial position to issue letters of credit for these cargoes. All these negatives have fueled an impasse where few imports are being attempted into ports such as Gebze and Derince, Turkey.

Prices in offers from Mediterranean sources are heard at $645/t-$665/t for SN150 and $670/t-$695/t for SN500 or SN600. Bright stock is available from Spain or Italy to land into Gebze at $845/t-$870/t.

There are no reports of new parcels being arranged ex Kavkaz, Russia, and with the new spat between Russia and Ukraine still unfolding, there may be a hiatus in supplies of base oil from this region.

Middle East Gulf

Middle East Gulf business is dominated by exports of Group I and Group II base oils ex Red Sea from Yanbual Bahr and Jeddah, Saudi Arabia, accompanied by the vast quantities of Group III base stocks coming out of United Arab Emirates, Qatar and Bahrain. Group I supplies from Iran have all but disappeared off the radar, with only reports of small parcels moving out of the southern Iranian ports across to U.A.E. receivers. Local sources report that Iranian sellers are still looking to move material under sanction waivers granted to certain receiving nations, but the reason behind the lack of movement is the lack of suitable shipping, which is proving hard to charter. Many owner who previously traded in Middle East Gulf waters, lifting material ex Iran, have declined to operate out of Iranian ports under the rules of the sanctions, fearing they could be blackballed by U.S. authorities by operating in that region.

Prices being quoted for the small parcels of material moving into U.A.E. ports are at $685/t-$700/t for SN500, basis CIF.

FOB prices for fully approved Group III drawn from Sitra, Bahrain, faces upward pressure due to maintenance turnarounds planeed for early next year Europe and the Far East. Product sourced ex Bahrain may be substituted by one of the suppliers, which also has a refinery in Europe.

Notional FOB levels remain at $815/t-$850/t ex Al Ruwais and Sitra for 4, 6 and 8 cSt grades with partiall approvals moving into Western markets. Prices for Sitra oils marketed by Neste, which holds full U.S. and European approvals, rose to $900/t-$930/t for 4, 6 cSt and 8 cSt moving to European, U.S. and other Western markets. Eight cSt grades moving eastwards are around $100 less due to selling prices in those markets being lower.

These FOB prices are notional levels established on a netback basis using published freight rates and taking into account advised local selling prices plus notifications of bulk CIF/CFR cargo prices from various sources.

Group II supplies into Middle East Gulf blenders are forecast to rise next year to an all-time high due to formulary requirements for finished lubricants meeting European and North American standards. Many players say they will need to stock Group II and Group I, but still not many of them can see the time when Group II will totally take over from Group l. Given current price differentials, many Middle East Gulf blenders are reticent to switch from Group I, though they anticipate they may some day. Some say that Group III may be the ultimate answer, since it is produced within the region.

Prices for Group II from sources in the Far East appear to be falling while values from Western sources are rising. Local Middle East Gulf suppliers may be caught between these two very different markets and may have to adapt and modify prices on the basis of destination rather than an ex refinery basis.

Prices for fully approved products ex hub storage in the U.A.E., on an FCA basis or delivered by truck or flexitanks, are $1,085/t-$1,130/t for 110N, 150N and 220N; and $1,155/t-$1,195/t for 500N and 600N. These prices refer to Middle East Gulf delivered small quantities of less than 25,000 tons per load, but often with a total quantity of up to 300 tons per offtake. Prices may vary with destination and distance from hub supplies.


North African markets are now all importing base oils from external sources, although the refinery in Egypt that had been in turnaround for more than a year is reportedly coming back onstream. The EGPC tender had called for one cargo each month in the next quarter, and although this has been the case in the past, generally the quantities and number of cargoes has been increased over the same period. Receivers in Morocco are looking for further supplies of Group I grades during December from the usual sources in Italy.

South African sources report an increase in the number of Group III parcels arriving into the region from Malaysian sources as well as Northwestern European supplies of both Group III and Group I material from an oil major.

West Africa sources report that the Ghana tender may be supplied on a stand-alone basis with around only 5,000 tons of three Group I grades being loaded for supply into one discharge port, Tema. The other regional markets often supplied in conjunction with this shipment appear unable to take delivery of further material at this time.

At the same time no further cargoes appear to have been fixed for Nigeria, with only one outstanding parcel to be delivered from the U.S. East Coast. The rumored Baltic purchase appears to have come to nothing, and the Mediterranean cargo ex Italy assumed to be loading during December has yet to be nominated.

In the absence of any further transactions being established, Nigerian CIF/CFR levels are unchanged at $730/t-$745/t solvent neutrals ranging from SN150 to SN180, $790/t-$805/t for SN500, SN600 and SN650, and $885/t-$920/t for bright stock. SN900, as an indication only, may be priced at $815/t-$830/t CIF/CFR.

These prices are for parcels of at least 10,000 tons of Group I base oils delivered on a CFR or CIF basis into Apapa port, Nigeria.

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

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