EMEA Base Oil Price Report


The rollout of COVID-19 vaccines is raising hopes that the end of the pandemic may be in sight, but individuals in the base oil industry say it may take years to rebound from it, and some predict that full recovery may never happen.

Base oil prices are firmer across the board due to tight supply patterns and stronger numbers for crude and feedstocks. Demand is reviving in a number of European, Middle Eastern and African markets, with forecasts suggesting that the first few months of next year may see a period of catch-up as companies look to capitalize on stronger demand and a return to the “new normal.”

Crude oil strengthened over the past couple weeks, with dated deliveries of Brent crude breaching the psychological barrier of $50 per barrel at one point. The price stood at $49.30/bbl, yesterday for February front month settlement – a couple of dollars higher than previously reported. West Texas Intermediate is up to $45.80/bbl, still for January front month.

ICE LS gas oil values are firmer and have moved ahead by some $20 per metric ton to $408/t, now for January settlement. These prices were obtained from London ICE trading late Monday.


European export prices for API Group I base stocks have firmed on the back of many problems regarding availability for some of the heavier grades. Lack of feedstock is still a major factor when it comes to producing sufficient quantities of these grades to satisfy even a depleted market. Sources said they are thankful that demand is not higher, but the pandemic is affecting demand as well as supply. In any case, many suppliers have declared that they are sold out of large quantities of Group I and in some cases are now quoting for deliveries that would occur in the second quarter of 2021.

Solvent neutral 150 prices have risen to between $695 per ton and $725/t, while SN500 and SN600 are at $720/t-$755/t. Bright stock remains extremely tight with indications heard at around $800/t, which suggests a price range of $795/t-$825/t. These prices refer to cargo-sized parcels of at least 2,000 tons sold on an FOB basis ex mainland European supply points, always subject to availability.

The market for Group I sales within Europe is also showing firmer numbers. The normal December sell-off of stocks is missing altogether this year with many suppliers extremely short of material, even looking to the first part of next year. There have been discussions regarding contractual offtake for next year, but in some cases producers are unwilling to commit to fixed quantities, citing that they are not yet in a position to guarantee avails for a number of grades.

Part of the problem with the local or regional markets has been the uncertainty regarding the demand for finished lubricants, although many were predicting that the market was almost certain to pick up during the first quarter of next year. This is now changing with many sources stating that they are in no better a place than they were some months back.

The specter of Brexit is also affecting markets in Northern Europe with the United Kingdom blenders moving to maximize stocks of base oil prior to leaving trading arrangements with the EU.

The differential between domestic and export prices is maintained between €35/t-€85/t, since both sectors have moved higher during December.

Group II prices are firmer with source increases being applied to imported material. Levels have moved upwards by another €10/t-€20/t, depending on grade, with the heavier grades more inclined to the higher end of the increases. Demand is reasonable for Group II base oils, with sellers stating that January and February sales are already in place, and forecasts are that sales volumes will be at the highest levels yet, since the introduction of Group III into the European markets.

There is still some debate as to the next decision on the duty waiver for imported Group II grades, with some comments having been heard that would imply that after review in July next year to a six month waiver for only 100,000 tons, the allowance would be removed entirely for 2022, meaning that all imports from sources without an FTA would be subject to 3.7% import duty. It is also not clear as to whether the duty element will be payable on Group II imports which are coming into the U.K. after January 1. It is feasible that all imports, including those from the EU, may be free from import tariffs.

Prices are adjusted higher being currently assessed at $875/t-$900/t (€720/t-€740) for 150 neutral and 220N, with 500N and 600N at $965/t-$1000/t (€795/t-€825). A stronger euro has hiked the dollar prices higher, providing sellers with higher returns on a USD basis.

Prices are in respect of a wide range of Group II base oils, including European, and U.S. fully approved grades, but also unapproved or partly-approved grades from Middle East, Far East and U.S.

Group III prices remain firm with demand at an all-time high for these grades. Producers have been cajoled and encouraged to send extra product into the European market with sales to contracted and regular buyers already in place for the first part of 2021, and very few spot sales being reported due to supply constraints in the market.

In mainland Europe Rhine water levels remain exceptionally low, hindering, and in some cases, preventing barge deliveries of base oils proceeding into the European hinterland. Road transport is also suffering the varying pandemic rules imposed by different countries, with cross border transport under pressure.

Prices had already moved higher at the beginning of December, therefore levels are maintained this week with current offered levels between €780/t-€820/t in respect of the range of partly-approved Group III base oils. Price levels remain assessed between €800/t-€820/t for 6 and 8 centiStoke grades, with 3 and 4 cSt at €780/t-€795/t. These prices are for oils sold on an FCA basis ex Northwestern European hubs.

The range of fully-approved Group III base oils holding European OEM approvals also have prices maintained between €825/t-€850/t for 4 cSt, with 6 and 8 cSt grades between €845/t-€875/t.

Baltic and Black Seas

Trading In the Baltic regions continues, albeit on a very much reduced scale than in years gone by. A couple of movements arose, with cargoes loading out of Kaliningrad, and Russian export barrels moving to Turkey. The freight angle for these two parcels would be substantial, since they would normally be made from sources in the Sea of Azov. Either that supply source has problems, or the freight costs could have been competitive with the respective vessels’ re-positioning due to future voyage commitments.

No cargoes are reported moving into mainland Europe this week, although a few parcels are planned prior to the year-end to move into Antwerp-Rotterdam-Amsterdam and the United Kingdom.

Indication prices are higher, with FOB levels moving upwards, with SN150 now around $665 per metric ton, SN500 around $695/t and BS 150, with min 95 VI at $800/t. Base oils SN150, SN500 and quantities of bright stock from Gdansk are in line with mainstream European levels, with solvent neutrals at $695/t-$730/t and bright stock at $795/t-$810/t FOB.

Mediterranean supplies of Group I base oils appear to be on the rise again, with a number of parcels making their way into the ports of Gebze, Turkey, Derince and Gemlik from sources in Italy and Greece. The rumors are that insufficient supplies and availabilities are forthcoming from Izmir refinery, prompting Turkish buyers to look at alternative sourcing for supplies of Group I base oils.

Group I grades from Mediterranean sources are assessed at $765/t, $790/t and $860/t on a delivered basis CIF for SN150, SN500/600 and bright stock, if loaded and available.

There is no further news of Russian barrels loaded through the STS facility at Kavkaz, Russia. The river system may be difficult now with ice build-up; hence, any material exported from the Volga regions may have to be delivered to storage by train or road. Indication STS prices out of Kavkaz, Russia, have therefore been maintained, although it is possible that further supplies from this source could carry hefty premiums in the future. Levels are placed at $625/t-$655/t in respect of SN500, with SN150 at $620/t-$645/t.

Group II and Group III base oils FCA Marmara have prices at €745/t-€795/t for low vis Group II grades, with the higher vis 600N at €790/t-€820/t.

Group III base oils are priced at €875/t-€900/t for 4 centiStoke material, with 6 cSt grades at €920/t-€940/t and 8 cSt.

Middle East

Large cargoes of Group I base oils were loaded out of Yanbu and Jeddah in the Red Sea regions for discharge into the west coast of India and United Arab Emirates. Two large parcels for U.A.E. are to be delivered in December, this source being perhaps the only alternative open to buyers of Group I base stocks in the U.A.E.

With the arbitrage firmly closed between Middle East Gulf and Europe, and Group I base oils in short supply from both Europe and U.S. sources, supplies from Saudi Arabia are perhaps the only alternative open to buyers in Middle East Gulf locations.

There are no further reported incidences of Iranian exports moving out of Bandar-e Emam Khomeyni or Bandar Bushehr going into U.A.E. Given reports on the Iranian COVID situation, it may be a long while until exports of Group I base stocks are seen coming out of the southern Iranian ports.

Notional prices for Iranian barrels of SN500+ are still discussed in U.A.E. circles, where information suggests that indications may be at $735/t-$755/t, delivered CFR U.A.E. SN150 is also indicated lower at $695/t-$720/t. It must be stressed that these numbers are purely hypothetical, yet receivers in U.A.E. are confident to discuss them as real.

Group III cargoes from Al Ruwais in U.A.E. and Sitra in Bahrain will have notional netbacks adjusted upwards in light of higher selling levels in different markets such as the U.S., Europe and China.

Netback levels are assessed at $795/t-$835/t for 4 cSt, 6 cSt and 8 cSt partly-approved Group III base oils. Fully approved Group III grades, from Sitra, marketed by Neste, will provide increased netbacks due to higher pricing in global markets. Assessment is that these grades will netback at $850/t-$875/t for 4 cSt, 6 cSt and 8 cSt Group III base oils.

Notional FOB prices on a netback basis are based on prices derived and informally assessed from regional selling levels, less marketing, handling and estimated freight costs.

Group II base oils FCA U.A.E. storage are maintained with levels $730/t-$795/t for light vis grades 100N, 150N and 220N, with heavier 500N and 600N grades at $785/t-$820/t. The wide range takes into account various quantities from different sources that were delivered into the U.A.E. in both bulk and in flexies, often with differing contract terms and selling conditions attached.


South African shipping agency sources were alerted through local receivers that a cargo of Group I base coils may arrive in Durban during February. This parcel will load out of the Red Sea and will consist of 4,000 tons of Group I grades. This would appear to be the first occasion that a cargo from source has landed in South Africa.

Mediterranean markets were busy, with a number of smaller cargoes of Group I and Group III base oils moving across the Mediterranean into Israel from sources in Spain and Italy. A number of movements also took place from Sicily into North African ports.

In West Africa further inquiries were made for material to load out of the Baltic for supply into Apapa. One parcel, originally 5,000-10,000 tons, was rationalized to 5,000 tons only. This quantity is marginal because freight rates for such a parcel will incur higher unit costs, as opposed to larger parcels such as 15,000 tons that is loading out of Greece this week for arrival into Lagos during January.

This is an ideal situation for the supply of base oils into this market because with the cargo in transit at year-end, it will not form inventory for the seller nor the buyer. The producer has less inventory, and the trader involved will sell the cargo on a CFR/CIF basis in January.

There is also a further enquiry to load smaller cargo out of Livorno, although the intended quantity of 3,000-3,600 tons is exceptionally small for shipping purposes, unless this quantity can be linked with another supply from elsewhere.

API Group I base oil prices are maintained this week, following large increases to FOB numbers that were adjusted in this report. However, new offers have prices much higher by some $60/t-$80/t.

CFR/CIF levels for cargoes arriving now, which would have been transacted perhaps some four to six weeks ago, remain as advised in the last report. They will be $775/t for SN150, SN500 at $790/t-$800/t. Should higher specification SN900 be required – with VI minimum of 95 – then a higher level would be expected for this grade, at around $910/t. Currently, bright stock is not available, but indications could be expected at $895/t.

Future cargoes can be expected to be priced at around $850/t for SN150, with SN500 at $895/t and min 95VI SN900 levelled at $925/t. Bright stock, if available for future cargoes in February or March, can be expected at around $975/t.

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

Historic and current base oil pricing data are available for purchase in Excel format.

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