EMEA Base Oil Price Report


As the main base oil conference of the year approaches, many players coming to London will be keen to hear market trends discussed and debated. Anti-trust regulations prohibit talk about future prices during formal sessions, but that topic will certainly be one of the core items of interest to almost everyone attending.

Although crude oil prices have dropped lower than levels seen the past month, base oil values still appear firm throughout Europe, the Middle East and Africa. The degree of firmness may vary from area to area and from one types of oil to the next, but in general price oils are still rising.

Some buyers have disputed the appropriateness of this, but producers insist they are only recouping margins that had been depressed until lately, and that they are setting out their stalls with merchandise that is competitively priced.

Crude values ended their slide, as dated deliveries of Brent rose some $2 from last week to trade at $65.60 per barrel late Tuesday in London. West Texas Intermediate climbed about $2.50/bbl to $62.30/bbl. Both marker crudes are now in tandem with front month being April. ICE LS gas oil was at $577 per metric ton for March front month yesterday, some $20/t higher than last week.

Disagreement still reigns about the effects on base oil pricing. Industry insiders are watching to see if prices can continue rising in the face of lower feedstock and operating costs.


After stalling last week, European API Group I export prices appear to have gained a new impetus and firmed again, with offers containing higher values. Supply and demand seem balanced, so buyers who stood back the past couple weeks are now being pushed to secure available parcels before prices move even higher.

Prices for Group I light solvent neutrals are offered slightly higher at the low end of the spread between $770/t and $785/t, while heavier neutrals are up around $5/t to $840/t-$865/t. Demand for large parcels of European bright stock appears to be rising this week, with a number of inquiries for West Africa trades being floated for March loading. This appears to have pushed prices a little higher to $935/t-$970/t.

The above levels pertain to large cargo-sized parcels of Group I offered and sold on an FOB basis ex mainland European supply points.

Intra-regional sales of Group l seem to have picked, perhaps in response to spring demand for finished lubricants. Many large tenders start to require deliveries of finished lubes to be made over the next few months, building stocks for summer peak. Prices in these markets are opaque since prices for this month were set at the start of February levels were agreed and adopted by sellers and buyers, but in the interim some buyers saw crude and feedstocks falling and requested that sellers re-examine prices for February and beyond. This practice has been resisted by sellers, who appear to have stood their ground, citing that crude and feedstock levels are not directly related to current base oil levels, at least in the short term, and that prices remain unchanged. Many blenders are adamant that they will settle this score when prices come out this week for March, although with a reversal in fortunes for crude and feedstocks this week, this attitude may become diluted.
As a guide to local pricing, a differential ranging between 80-95 pmt is to be added to export price levels.

In last week’s edition FCA prices in respect of Group ll grades were erroneously priced in euros. These levels pertained to U.S. dollar trades, denoted thus since some sales of Group ll base oils are made in local currencies. Therefore the report should have read: “$885-$900 pmt in respect of the light vis oils, with higher vis grades 500N and 600N between $955-$985 pmt.

A number of Group ll producers are again looking at revising selling prices for these grades. Options are being kept open for levels to be adjusted upwards in another round of price increases. Within Europe the increases have settled down with a number of buyers expressing doubt as to whether the market can take further increments in respect of these grades.

However, with further firmer movements emanating from Group l sources, there may be scope for adjusting Group ll prices upwards to maintain differentials. FCA prices from Group ll distributors are tweaked slightly higher this week and are now assessed between $890-$905 pmt (715-725) in respect of light vis oils, with heavier grades between $960-$985 pmt (770-790).

Group lll sales have prices holding in similar ranges to those noted last week, since this market does not appear to be receptive to numerous small increments, with prices remaining stable for some weeks at a time. The sentiment is that Group lll prices will rise slightly over the next few weeks, should raw material costs remain at the same level as current.

However, producers are keen to maximise prices at this stage given that other base oil types have seen large increases in recent weeks. It is heard that with some sellers are trying to gain market share, and others defending current business, there may be a reticence to push prices too far at this time.

European imported prices remain unchanged around $880-$910 pmt CIF in respect of 4cst and 6cst grades discharged in NW Europe, with local euro based FCA sales levels around 845-860 pmt in respect of 4cst and 6cst grades. Fully ACEA approved grades on basis FCA ARA are priced higher between 880-895 pmt in respect of 4cst and 6cst grades, with 8cst material around 855-870 pmt.

The latter prices are in respect of FCA or truck delivered Group lll base oils sold to local blenders, and do not apply to material delivered in bulk cargoes to large users of these grades such as major blenders or additive manufacturers.

Baltic and Black Seas

Baltic Sea reports that a large cargo of around 12kt of Russian export grades has been loaded out of Ventspils and Liepaja and has been booked for Nigerian receivers in Apapa. This parcel may also be topped off with further quantities, possibly brightstock, en route to WAFR. This is largest parcel fixed for WAFR out of the Baltic for some time, but short sea-trades also record a number of cargoes moving to ARA and WCUK.
Prices remain buoyant although it has been suggested that the large cargo above had been negotiated some time back and that the prices were considerably lower than present day indications.

Refinery ex-gate prices remain positive, with FOB levels having to move upwards to take account of these increments. SN 150 is offered between $720-$740 pmt FOB, but with one offer heard at much lower levels at around $645 pmt. SN 500 is indicated in offers between $765-780 pmt with SN 900 between $820-$835 pmt FOB. These prices are calculated on the basis of CFR/CIF offered levels less freight. Various specifications of brightstock is currently indicated between $865-$915 pmt, prices are relative to specification and quantity.

Black Sea remains predominantly covered by Turkish imports, with the addition of another large parcel or Russian export barrels being discussed coming out of Kavkaz. A cargo of some 11kt is being mooted, but destination is still not revealed posing questions as whether this material could go into MEG or India, or follow the last large parcel and bridge into Rotterdam. Singapore also remains possible destination for base oils loading out of this facility.

Turkish receivers in Gebze and Derince have been looking at future Group l cargoes from Greece and also from NW Europe, with a view to receiving these supplies during March and April. Prices for Group l base oils are offered lower than heard previously, with unconfirmed numbers around $775-$795 pmt for light neutrals, with SN 600 and SN 500 around $835-$855 pmt CIF. These lower prices are contained in offers which have been heard from receivers.

Group ll and Group lll imports also figure in the base oils being distributed within Turkey on behalf of the major suppliers of these grades.

Middle East Gulf

Less and less Iranian availability of the Group l SN 500 grade which for some time was the major export of Group l base oils coming out of MEG. With only one small cargo enquiry for delivery in Pakistan, this trade appears to have diminished enormously over the past few months. Comments heard from contacts in UAE have suggested that this material is being used more in domestic blending and that Iranian demand for such base oils has surged during the latter part of 2017 and the early part of this year, soaking up almost all avails from the base oil refineries in Iran. There are no official comments as to prices for the SN 500+ grade, hence it is assumed and reported through third parties that levels will be around $840-$855 pmt FOB.

Saudi Arabian Group l barrels continue to move into Oman, UAE and WC India, and with the new Group ll production, this combination has bolstered the potential exports from Yanbu and Jeddah refineries, particularly with the added capacity for brightstock. Prices, either on an FOB or CIF basis, are currently unobtainable for these grades.

Group lll reports are that a large cargo has loaded out of Al Ruwais for receivers along the coast in Sharjah. This port has become one of the largest receiving hubs for these Group lll grades, along with Mumbai. Prices on a netback basis resulting in producing FOB nominal prices in respect of Group lll grades are lifted slightly. Levels are deduced from declared landed prices from a wide variety of discharge ports, including, but not limited to, WC India, UAE, NW Europe, U.S. and the Far East. Al Ruwais material from Adnoc is estimated to load at around $760-$785 pmt FOB in respect of the 4cst and 6cst grades. At other producing sites such as Sitra, Group lll grades are also estimated at similar levels. Fully approved material exported from Sitra under the Neste banner is estimated to netback higher, producing higher selling prices at discharge port. These assessments are between $795-$825 pmt basis FOB.

There have been no reported sales of Yanbu sourced Group ll grades other than into WC India, although it is assumed that buyers in MEG and other approachable markets will also be canvassed re potential purchases of these new grades. Sources have also commented that perhaps a large part of the new production will be utilised in-house for the ‘local’ production of new ranges of finished lubricants within the Kingdom.

Prices regarding Group ll base oils moving into UAE having been sourced ( at least originally ) from Far East and US are mostly maintained this week, but with sources making noises that March 1 may see some upward drift in local numbers. Heavier grades appear to have moved upwards by a small increment of around $5 pmt
Levels remain placed at around $765 pmt in respect of 100N and 150N, with 500N and 600N between $880-$895 pmt CIF MEG. Prices for local sales in UAE for Group ll base oils on FCA or delivered basis also remain as per last reported for the light grade range, at around $875-$895 pmt in respect of the grades 100N/150N/ 220N, with 500N/600N moving upwards to between $1000-$1045 pmt. To clarify, these latter sales are often in respect of quantities as small as 5-10mt.


Further to last week’s news East African sources have also confirmed that they are looking at quantities of Group lll base oils to supplement some of the Group l stocks being imported. Further information was gleaned as to South African prices increases but with some locals playing down that increases had been as much as $100 pmt.

Mediterranean and North African receivers have started taking further cargoes of Group l base oils into Morocco, Egypt and Tunisia, this appears to be a re-start to operations for some, having had few larger cargoes of base stocks going into these markets over the last few months.

There are not many declared cargoes going into WAFR at this moment, but those that are nominated are certainly large enough to make up for several smaller parcels. The Ghana tender is fixed for a 4.5kt cargo out of the Med, and news that the usual buyers in Cote d’Ivoire and Guinea will be taking delivery of a combination cargo of Group l base oils in the next few weeks has been received from sources in that region.
The Baltic supply for Nigeria regarding a total of 12-15 kt of Group l base oils coupled with the USGC sourced cargo of 14kt, will certainly accelerate base oil activity in Apapa. Receivers in Nigeria appear to be pretty cool regarding the prices paid for these two cargoes, and although the freight will be minimised b the size of the shipment, it has also been mentioned that FOB ( or bottom line CIF/CFR prices ) were also exceptionally attractive.

Re-refined base stocks have been accepted by a number of buyers in Nigeria and other parts of WAFR, where price is the primary driver, and where with a little imagination, these grades can be utilised to great effect. Prices appear to be very attractive, and although quantities are relatively small compared to the large bulk parcels above, these grades can contribute greatly in markets such as Nigeria, Cameroon and Niger. These grades are being offered delivered in flexies, with the latest prices heard from sellers around $745 pmt delivered CIF Lagos container port.

Prices in respect of the cargoes ex Baltic and USGC, may not be representative of other cargoes going into WAFR ports but offers for Group l base stocks into Nigeria established for parcels of around 6-8kt. CIF/CFR prices were heard around $925-$950 pmt in respect of SN 150, SN 500 between $970-$995 pmt with brightstock between $1075-$1095 pmt. SN 900 loaded ex Baltic is contained in one offer at around $983 pmt.

As mentioned these prices refer to quantities of Group l base oils delivered CIF/CFR Apapa, Lagos, in minimum parcel sizes of 6kt total.

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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