EMEA Base Oil Price Report


Base oil markets are getting back to some form of normality as buyers and sellers returned to work this week after summer holidays. Activity seems slow so far, but perhaps the coming days will yield some direction about the direction of the markets.

API Group I remains balanced despite a strike at a Northwestern European refinery. The strike had shortened availability, but gaps have been filled from alternative sources around Europe and the Baltic. It is too early to gauge whether demand will rise during the next few weeks, although sources said some blenders are back in buying mode and interested to establish supply contracts for next year for Group I grades.

Group II availability is ample in Europe and the Middle East Gulf. There have been no rumblings of any moves on prices, as margins appear to still be acceptable to sellers. Here, too, some blenders are entering into negotiations regarding contracted barrels for next year and, indeed, for the fourth quarter of this year.

Group III availability within Europe could shorten since maintenance turnarounds are scheduled at a number of plants during the next few months. Most suppliers claim to have made provisions to have the product available for any eventualities.

Crude and feedstock prices remain around the same levels as last week. Dated deliveries of Brent crude did breach $60 per barrel at the end of last week, but bell back to $58.40/bbl by yesterday, now for November settlement. West Texas Intermediate crude posted at $54.70/bbl for October front month. ICE LS gas oil was at $556 per metric ton for September front month.

These prices were obtained from ICE trading in London late Monday.


European prices for Group I exports are stable between $575 per ton and $598/t for solvent neutral 150 and $580/t-$605/t for SN500. Bright stock has also stabilized and is unchanged this week at $675/t-$700/t. Some sentiment was expressed this week that prices are starting to weaken – the rationale being that markdowns are emanating from markets such as the Far East, which offers alternative sourcing for some European export markets. Traders in those areas are therefore requesting lower numbers from European suppliers for September loadings.

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

Group I trade within Europe should return to normal this week as sellers and buyers get down to business. Some said trading may start slowly since many buyers topped up inventories before the summer recess. However, there are a small number of inquiries around for ex-tank supplies for this month, and some blending operations are looking to renew contracted supply arrangements for next year.

Many lube blenders have confirmed that they remain committed to some Group I supplies, although perhaps in smaller quantities than in previous years. Many are now working with both Group I and Group II base oils and supplementing with Group III where required.

Group I prices for sales within the region appear to have are essentially unchanged from July, with no signs of impending pressure upward or downward. The differential between pricing for intra-regional and export sales remains around 85/t-100/t lower for exports.

Group II prices continue to hold their significant premium over Group I levels. This appears to be one major stumbling block against buyers changing over completely to Group II base stocks, since they maintain that certain grades of finished lubricants do not require Group II.

Prices in the Far East are falling, increasing incentive for sources in that region to target European markets where prices are higher. The incidence of incoming parcels is growing and is no longer confined to small parcels in flexies. Bulk shipments have been offered to mainstream users around Europe.

European Group II price ranges have widened to take account of these new offers, with the lower end of ranges moving downwards by some $20/t-$30/t. FCA levels are now assessed at $700/t-$815/t (625/t-730) for 100 neutral, 150N and 220N, while 500N and 600N are at $720/t-$825/t (640/t-740).

These prices pertain to Group II oils with and without full slates of finished lubricant approvals.

Group III prices are mixed with some notices of price increases commencing Sept. 1, but there is resistance to these increases and rumors of some buyers being advised that prices are to remain fixed as per August numbers. At the same time, there are suppliers who are showing aggressive offers to new and existing buyers, in what appears to be a quest to increase market presence in the European arena.

As mentioned, maintenance turnarounds are scheduled at a number of plants over the next few months, and this could affect the overall supply situation, although sellers claim to have inventory to cover normal supply arrangements, particularly for contracted buyers.

Prices for Group III oils with partial slates of approvals are unchanged at 655/t-710/t for 4 centiStoke grades and 660/t-720/t for 6 and 8 cSt. These prices are on an FCA basis ex hubs in Northwestern Europe. Fully-approved Group III oils are priced at 775/t-855/t for 4 cSt, 865/t-915/t for 6 cSt and 785/t-865/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Baltic trade has picked up due to increased quantities of Russian export grades finding their way at acceptable prices, into shore storage in the Baltic ports. There have been a number of routine cargoes into Antwerp-Rotterdam-Amsterdam, and September will see a particularly large interest in a number of cargoes for the the United Kingdom, with traders and blenders building inventories prior to Brexit date of Oct. 31.

There are inquires for Baltic sellers to load 5,000 tons for the West Coast of India out of Gdansk, Poland, in addition to other parcels bound for the United Arab Emirates and West Africa. It is remarkable that with Baltic prices maintaining a premium over those available from the Black Sea that cargoes can still move from the Baltic to export markets such as India and the U.A.E., but this can perhaps be explained by the grade mix and also the higher specifications attributed to Polish material from Gdansk refinery.

Prices remain unchanged this week at $475/t-$500/t for SN150 and $485/t-$520/t for SN500, both on an FOB basis. Bright stock loading ex Gdansk refinery is reported at $675/t-$695/t FOB.

On the premise that values for Russian exports through the Black Sea cannot move any lower due to the costs of producing them, they remain at the low levels established over the last couple of weeks. A large cargo of 10,000 tons of Group I loaded from the STS facility at Kavkaz, Russia, for a two-port discharge in Turkey and Israel. Landed prices into Turkey will be lower than both supplies from Mediterranean sources and availabilities from the Izmir, Turkey, refinery.

Another large parcel of more than 10,000 tons is being arranged for Greece and Rotterdam from Kavkaz, with offer prices reported at $452/t for SN500 and $434/t for SN150.

Mediterranean sources are drawing blanks on continuing offers being made from Greek and Italian sources with Group I material intended for Turkey having CIF prices at $579/t for SN150 and $584/t for SN500. SN600 is seen offered at $594/t, with bright stock indicated at $755/t, basis CIF. Little interest has been generated at these levels, given the prices ex Kavkaz.

Group II and Group III base oils are available from sources in the Spanish Mediterranean, the Far East and the United States, both in bulk and in flexitanks, and are being touted as alternatives to material available ex-tank from traders and distributors representing major players.

Middle East Gulf

Red Sea sources report the loading of a large cargo from Yanbual Bahr and Jeddah, Saudi Arabia that is to discharge into the West Coast of India and the U.A.E. There are also additional September cargoes that will move to Chennai and Mumbai, India, and also to Oman and the U.A.E. These cargoes will include both Group I and Group II base oils.

No sooner has this report intimated the cessation of Iranian Group I cargoes than a large parcel of up to 10,000 tons of Group I Iranian base oils is recorded as loading on an internationally flagged vessel to discharge into two ports on the West Coast of India and one in Pakistan. While U.S. sanctions remain in place, U.S. authorities have offered to meet with Iranian leaders to discuss current and future events.

This offer has not been taken up by Iran, but at the same time neither has it been turned down. Base oil prices for premium Iranian SN500 are indicated lower than previously noted at around $545/t, basis FOB. This information is based on sources located within the U.A.E. and India.

Other Group I activity includes the cargo ex Kavkaz that will partly discharge into Hamriyah in Sharjah, U.A.E., with prices estimated to be around $550/t for SN500 and $530/t for smaller quantities of SN150. These prices will be competitive against any Iranian barrels that can find their way into the U.A.E.

Values for Group III oils ex Al Ruwais, U.A.E., and Sitra, Bahrain – offered by Adnoc and Bapco, respectively – are again unchanged, with no adjustments suggested for September for cargoes shipped into hubs. Oils with partial approvals are at $685/t-$725/t for all three viscosity grades. Eight cSt grades moving east to receivers based in India and China will produce lesser contribution levels due to lower local selling prices in these locations.

Group III base oils marketed by Neste also ex Sitra refinery in Bahrain will have higher netback levels because they carry the full range of European OEM approvals. Notional FOB or netback levels are unchanged at $785/t-$895/t for 4, 6 and 8 cSt grades delivered into European or U.S. markets. Nominal FOB values on a netback basis are calculated using regional selling prices levels, less marketing, handling and freight costs.

Group II levels in the Middle East Gulf have not seen any major changes and hence are maintained at current levels. These prices are for imported material sourced from the U.S., the Far East, Saudi Arabia and now Europe. This material is marketed on a resale basis within Middle East Gulf regional markets and is priced at $775/t-$880/t for 100N, 150N and 220N, while 500N and 600N are at $785/t-$900/t, all on an FCA basis ex U.A.E. hub storage.


North African markets are busy with cargoes loading out of Spanish, Italian and Portuguese sources for receivers in Morocco and Egypt. These parcels consist of Group I, Group II and Group III base oils, while bright stock cargoes continue to be arranged for supply into Alexandria, Egypt, to cover the requirements for the Egyptian General Petroleum Corp. tender.

South African traders and blenders have issued another raft of inquiries for the supply of smaller quantities of Group I base oils to be delivered into Durban during October. These quantities will be delivered in flexies and will be transported inland for onward distribution to smaller blenders. Another cargo from a major will load from Northwestern Europe or the Mediterranean with Group I, Group II and Group III base oils aboard, for discharge into Durban during the second half October.

West Africa is quiet this week, with no new reported cargoes being announced by either traders or receivers in Apapa, Nigeria. The two large parcels loaded on a vessel out of the U.S. Gulf for Nigeria and Tema, Ghana, has been clarified as being for the Tema contract after suggestions last week that the Ghanaian supply was not for the annual Tema contract. Therefore it is expected that 5,000 tons of the three main Group I grades will be discharged into Tema.

Group I prices for base oils currently being sold into Nigeria are once again unchanged at $695/t-$720/t for SN150, $695/t-$720/t for SN500 and $875/t-$910/t for bright stock. SN900 is currently indicated at $715/t-$725/t. There have been no recent movements in prices going into Nigeria, perhaps reflecting the relatively stable numbers available from sources in the U.S. Gulf, Europe and the Baltic.

These prices refer to parcels or cargoes of at least 10,000 tons, delivered into Apapa port, Lagos.

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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