EMEA Base Oil Price Report


Base oil trading across Europe, the Middle East and Africa was subdued the past week. All grades appeared flush and in some areas downright over-supplied, and demand was generally slow, though there continues to be strong draw for API Group II and oils carrying full slates of finished lubricant approvals.

Scheduled maintenance shutdowns loom for several plants, but even so there is little to suggest that availabilities will tighten. Forecasts of lackluster economic activity will suppress any signs of buoyancy, holding back industrial and commercial expansion until key geo-political factors can be sorted out.

Crude oil prices dipped as dated deliveries of Brent posted yesterday at $61.50 per barrel, $1 lower than last week, for April front month settlement. West Texas Intermediate crude slid around $2 to $52.10 per barrel for March settlement. ICE LS gas oil stayed almost flat at $583.00 per metric ton, still for February front month. All prices were established from ICE London trading late yesterday.


European Group I exports continue to reel from aggressive bidding from those few buyers who are in a position to lift larger quantities of base stocks for deep-sea markets outside European boundaries. A number of alternative sources offer better deals either because of lower FOB values or better freight rates. Prices are softer this week, although it is difficult to say precisely how much since negotiations continue.

There are signs of a number of inter-affiliate cargo movements are in the works, and it appears that major oil companies are balancing global inventories.

Prices for light solvent neutrals fell around $10 per ton to between $570/t and $590/t, while heavier grades such as SN500 were unchanged at $580/t-$620/t. Bright stock has also come under a bit of pressure during the past few days and dropped to $795/t-$825/t.

One major reportedly declared that prices below $800 would not be considered because margins would be unacceptable, but a sale of around 3,000 tons was said to have been booked for at $795/t, on an FOB basis.

The above prices 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 after contract reviews at the turn of the month. Some buyers complained of seeing much lower export prices, using this as ammunition to argue for markdowns. On the whole however, values have remained relatively firm at end January levels, with sellers forecasting that demand will gaining momentum during February ahead of the annual spring upswing in demand for finished lubes.

The differential between domestic and export prices widened to 85/t-120/t this week, due to the firmer stance taken by sellers within the region.

Although not so pronounced as the Group III scene, European Group II markets are also developing a two-tier featuring base stocks that carry full slates of finished lubricant approvals and those that do not. Group II oils fitting the latter description may be imports to the region carrying approvals from their source markets, but do not have the ultimate approvals granted by European OEMs, and hence are not capable of full integration in the European arena.

There is a hint of oversupply in this segment, but prices are unchanged this week with FCA and truck- or barge-delivered levels for 100 neutral, 150N and 220N at $845/t-$875/t (745/t-780) and 500N and 600N at $935/t-$970/t (820/t-855). These levels apply to Group II oils with full and partial slates of approvals as well as those without any approvals, although there are some reports of non-approved material in small quantities being priced around $45/t below the lower end of these ranges.

The Group III market in Europe maintains a two-tier structure where fully approved and partly-approved oils compete with each other. Demand is brisk, but an oversupply situation is reportedly developing, particularly at the lower end of the spectrum, and prices are said to be eroding. Maintenance turnarounds are planned for several large Group III plants, and this may take a little steam out of the overheating trend.

Prices for partly-approved Group III grades are unchanged at 720/t-740/t for 4 centiStoke grades, 750/t-770/t for 6 cSt and 740/t-760/t for 8 cSt, all FCA Northwestern Europe. Those with full ACEA and European OEM approvals are also unchanged at 855/t-890/t for 4 cSt, 880/t-900/t for 6 cSt and 860/t-895/t for 8 cSt, all on an FCA basis Antwerp-Rotterdam-Amsterdam.

These prices do not apply to material which is delivered in bulk cargoes to large or major buyers, which may cost less.

Baltic and Black Seas

Baltic trade was thin with fewer cargoes moving out of this region. Prices fell, mostly because of attempts by suppliers to clear inventories built over the past month. There have been offers resuscitate exports to markets like West Africa, but lower priced availabilities from sources such as the United States Gulf Coast could hamper these efforts.

A cargo for the United Arab Emirates is still being considered for loading out of the Baltic, and while that parcel does not utilize Russian export barrels, the movement is seen as an important regional development, potentially paving the way for further movements of heavy Group I grades, which are required in the Middle East Gulf marketplace. Cargoes using Russian exports are also being assessed for sale into U.A.E. receivers.

The smaller number of cargo movements has limited quantities moving into Antwerp-Rotterdam-Amsterdam and the United Kingdom, although a couple of reasonably large parcels are moving into the former destination during the middle part of February. There is no more news regarding the large cargo for Nigerian receivers mentioned two weeks ago.

Prices dipped to $555/t-$580/t for SN150, $555/t-$585/t for SN500 and $795/t-$830/t for bright stock from southern Baltic ports, all on an FOB basis.

Mediterranean suppliers are once again working to send Group I cargoes into Black Sea and East Mediterranean ports. They have had some success, but local prices and availabilities in Turkey are still an attractive alternative. The costs attached to handling and storing larger quantities plus cash flow issues stack against imports, since domestic material can be bought by the truckload with local currency. However, European sellers are reportedly offering exceptionally attractive prices to complete deals for February. Cargoes are targeted into Derince and Gebze, Turkey, with CFR/CIF prices for SN150 and SN600 estimated at around $580/t and $595/t, respectively.

Prices for Russian Group I base oils available on an FOB basis ex Azov are assessed at $560/t-$575/t for SN150 and $570/t-$590/t for SN500. The 15,000-ton parcel loaded STS ex Kavkaz, Russia, for Singapore, would have been priced around $540/t-$555/t.

Middle East Gulf

Red Sea sources report a number of parcels of Group I and II being loaded from Yanbual Bahr and Jeddah, Saudi Arabia, for receivers on the West Coast of India, the U.A.E. and Oman.

No exports are reported from southern Iranian ports, suggesting that U.S. sanctions may finally or eventually start to bite. U.A.E. sources suggested that some material is moving into storage in Hamriyah and it is being used locally, either sold in smaller lots or used in small batch blends.

Group I imports are being considered from the Baltic and Black Seas, as well as the U.S. Gulf Coast One source said the delivery lead times are problematic, but special pricing is attracting attention. Group I heavy neutrals are targeted below $600/t, and Group II parcels from U.S. sources have been offered at rates competing with Group I economics. Bright stock figures to be part of cargoes offered into the U.A.E., with prices estimated at $835/t-$860/t, delivered CIF.

A European parcel Group I grades is offered ex Northwestern Europe and Mediterranean into the U.A.E. U.S. material is lower in price, but may lose because of longer lead time. A couple Group I cargoes are planned for ex U.S. Gulf Coast, either for discharge either into the U.A.E. or into both the U.A.E. and the West Coast of India.

Group III cargoes from the Middle East Gulf are planned for shipment into China and India. Exports from Al Ruwais, U.A.E., and Sitra, Bahrain, appear to be up for February, perhaps reflecting brisk demand in markets such as India.

Notional FOB prices for Group III grades are unchanged at $750/t-$800/t for 4, 6 and 8 cSt grades with partial approvals from Al Ruwais and Sitra. Eight cSt oils moving to India and the Far East yield lower netbacks due to local selling prices being less than those achievable from Western markets. Nexbase oils sold from Sitra by Neste, which carry European OEM and ACEA approvals, are unchanged at $905/t-$945/t for 4, 6 and 8 cSt material moving to European, U.S. and other Western markets.

These prices refer to notional FOB levels established on a netback basis using published freight rates, local selling prices and additional notifications of bulk CIF/CFR cargo prices from various representative and reliable sources.

Sources said Group II base oils are starting to make inroads to Middle East Gulf markets, though perhaps not because of performance requirements. These grades are often being made available at prices that compete with Group I levels, and while not carrying full European approvals, these oils can be satisfactorily used in primary blends throughout the Middle East Gulf.

At the same time, fully approved Group II oils from the Far East and the U.S. are being dispensed from Middle East Gulf hubs, either on an FCA basis or delivered by truck or flexitanks, priced at $960/t-$995/t for 100N, 150N and 220N and $1,025/t-$1,045/t for 500N and 600N.

These prices refer to small quantities of less than 25,000 tons per load, delivered around the Middle East Gulf. Prices may vary with destination and distance from hub supplies.


North African imports of Group I base stocks ex a Spanish source were nominated for delivery into Morocco during February, this supply being in addition to other cargoes loading out of Livorno, Italy, for the same receivers in Mohammedia.

South African sources confirmed that a cargo of Group III will arrive during March into Durban. The supply is being made ex U.S. Gulf Coast and will include around 4,000 tons of two or three grades. A Group I cargo is also being prepared for loading during late February or early March from Northwestern Europe or the U.K. for delivery into South Africa.

West Africa markets report the purchase of a 15,000-ton parcel of Group I and II for receivers in Nigeria. The Group II grades do not have ACEA approvals, but they are not necessary in Nigeria where under some circumstances they can be used to replace Group I.

Nigerian sources suggested that bright stock and heavy grades such as SN900 blends will remain integral parts of the Nigerian market, and whilst Group II base oils may gain ground, prices there remain paramount. If Group II base stocks became less than competitive, then buyers would likely revert back to Group I.

CIF/CFR numbers for Group II grades landing into Apapa are being assessed currently and will be reported as soon as practical. Light Group I grades are assessed at $$720/t-$745/t, SN500 and SN600 at $730/t-$750/t, bright stock at $920/t-$940/t and SN900 at $775/t-$795/t CIF/CFR.

These prices refer to cargoes of more than 6,000 tons delivered into Nigerian ports such as Apapa or Port Harcourt.

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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