EMEA Base Oil Price Report


As the industry prepares for the ICIS annual base oil conference in London, markets are still reeling from the coronavirus epidemic in China. There has been a far-reaching effect in other countries, and the extent and damage caused by the outbreak is incalculable. It may be some time before the industry recovers.

The Middle East and Africa appear to be less affected by the virus than Europe, but some say it may take years to rebuild production and industry within China, with the knock-on effects which this will have throughout the world.

Base oils will suffer in terms of a massive downturn as will other sectors of the Chinese industry, but to what extent and how long this will last is anyone’s guess.

Apart from the effects of the coronavirus, base oil prices are something of a conundrum at the moment with some producers moving prices higher due to demand and raw material costs. Other players are calling for lower prices due to falling crude and feedstock values, although refiners are saying that lower costs are yet to affect production and that prices should remain where they are or moved higher. There is no clear direction for the market at the moment.

Crude oil has staged a mini comeback with prices bottoming out last week, now having moved upwards by some $4 per metric ton to $5/t. Dated deliveries of Brent crude is now posting at $57.30 per barrel for April front month settlement. West Texas Intermediate crude has also revived and has clawed back upwards of the all important $50 mark, recording now at $52.05/bbl, for March front month.

ICE LS Gas Oil has moved upwards to a new level of $515/t, now for March front month, some $25/t higher than last week. Prices were obtained from London ICE trading late Monday.


European Group I export prices had been exposed to the weaker sentiment pervading the markets when crude and feedstock prices were lower, but prices have stabilized at current levels. There are no restrictions on availabilities, but at the same time the market cannot be described as long. A balanced scenario may be emerging.

FOB prices are maintained this week after a small realignment last week. There are some suggestions prices might start to rise, since this was the intention of producers at the beginning of the year. The sudden drop in crude and feedstock prices quashed any hopes of hiking numbers, with most suppliers merely hanging on to existing levels, hoping for a reversal in the price drift for crude and petroleum products.

The ranges are assessed with levels for solvent neutral 150 remaining between $565/t-$600/t, with SN500 at $575/t-$620/t. There are some pricing ideas from certain suppliers to move the lower ends of the spreads higher, but this is only talk at the moment. Bright stock is priced at $655/t-$685/t,

These levels refer to cargo-sized parcels of at least 2,000 tons of Group I base oils, sold on an FOB basis ex mainland European supply points, always subject to availability.

European Group I markets are probably best described as stable with sentiment changing from last week when weaker fundamentals supplied the ammunition for buyers to beat at the doors of suppliers to reduce prices. The small spike in crude and product prices has altered the ethos of weaker prices, with most buyers being content to accept current prices.

Sellers have commented that the pressure to adjust levels downwards has evaporated just as quickly as it appeared at the beginning of last week, with the majority of buyers accepting offered price.

The price differential between domestic prices and those applying to exports remains unchanged this week with the differential assessed between 85/t-110/t.

Group II prices are a mixed bunch with some players applying source increases where possible, and others maintaining the status quo. Buyers are aware that European prices for Group II base oils are higher than almost any other market. The market is also confused by the fact that prices coming from U.S. material are tending to be firmer, with prices from Far Eastern sources coming under pressure from the fallout of the virus in China.

The European import quota apart, importers are paying duty on most Group II base oils at the moment and then reclaiming 3.7 percent under the quota limits which are up to a maximum of 200,000 tons during the first six months of this year. There has been a notable drop in the smaller imported quantities. Some sources said that it was just too cumbersome to have to pay the duty and then reclaim the tariff in arrears. Without knowing when the quota limit is reached players are commenting that they would be gambling in having the 3.7 percent duty refunded.

FCA levels are left unchanged at $755/t-$800/t (690/t-755/t) for the two lighter viscosity grades (150N and 220N), with higher viscosity grades (500N and 600N) at $790/t-$825/t (730/t-755).

These values apply to a wide range of Group II oils, including those from Europe and the U.S. with full slates of finished lubricant approvals and those with partial slates or no approvals from the Middle East, the Far East and the U.S., some of which may be imported in flexitanks.

European Group III markets are verging on oversupply again. Prices however remain reasonably flat with some participants trying to move numbers higher. This may be difficult to achieve with demand crashing in Far East markets, and producers are looking to the European market to move spare capacity. The European market has limits for these grades, and is not a dumping ground where excess product can be accommodated.

Prices are relatively stable with partly approved Group III base oils at 655/t-710/t for 4 centiStoke grades, with 6 cSt and 8 cSt base oils at 660/t-720/t. Prices refer to FCA supplies ex northwestern European hubs.

Prices for European OEM fully approved Group III base oils are maintained this week after the readjustment in the last report, and are at 740/t-800/t for 4 centiStoke base oils, with 6 cSt grades at 770/t-815/t and 8 cSt oils at 755/t-810/t.

Baltic and Black Seas

A number of very large enquiries were made in the Baltic markets for Russian and Polish Group I export barrels. Prices are competitive against mainstream supplies anywhere in Europe – not many suppliers within Europe can accommodate the quantities or the grade splits. It is almost as if these large parcels are propping up the market, maintaining prices at current offer levels. One cargo of around 15,000 tons was booked as of this date, with another three parcels discussed.

The cargo talked about from Riga for receivers in Aqaba appears to have switched to loading in Gdansk, although this fixture is not firm as of yet.

One enquiry to load around the end of February is for a quantity of 84,000 tons of three grades of base oil to load out of the Baltic for Angola. Whether this cargo will load on a stand-alone basis or be combined with material going into Nigeria remains undecided. Loading a larger parcel may be difficult due to draft restrictions in the load port.

If the list of enquiries is credible, then some 50,000 tons plus of Group I exports will load during February, this in addition to 15,000-20,000 tons of material moving out of the Baltic and going into Antwerp-Rotterdam-Amsterdam for contract supplies. This is a large fillip for the Baltic market, which was sold out of available product over the past few weeks.

Some suppliers have mentioned they will only have availabilities of Russian export grades towards the end of March.

Baltic prices are maintained this week, with the main grades such as SN150 at around $510/t-$525/t, with SN500 between $520/t-$535/t. Additionally, SN150, SN500 and bright stock can load out of Gdansk, with the bright stock indicated between $645/t-$675/t FOB. Prices in respect of solvent neutrals will be aligned to European mainstream prices, and may be pitched slightly higher than Russian export barrels out of Riga, Ventspils, Liepaja, Klaipeda and Svetly.

Kavkaz, Russia, STS operations in the Black Sea are back this week, with two cargoes loading. The first is some 17,000 tons bound for receivers in the United Arab Emirates, and then the balance to contracted buyers in Singapore. The split of quantities delivered to each location is not disclosed. The smaller is 2,000 tons loading for receivers in Greece. This quantity is normally delivered using a larger vessel bound for India or Singapore, but a stand-alone vessel was chartered to take the cargo.

Russian Group I export prices are expected to be very competitive, with levels not much above previously noted low prices. STS prices in respect of Russian export grades are reviewed this week. Levels reverting to former numbers tenable the large quantities to remain competitive, pitched around $460/t-$475/t in respect of SN500, with smaller parcels of SN150 at around $460/t.

Russian export barrels are quoted in offers to Turkish receivers in Gebze, Turkey, and are indicated at around $530/t in respect of SN500, with SN150 at $525/t CIF. These prices will be ultra-competitive against Mediterranean offers from Greece.

Group I offers from Mediterranean sources were adjusted lower with new indications at $625/t in respect of SN150 with SN500 at $635/t basis CIF Derince. SN600 is indicated at around $640/t.

Group II and Group III grades ex-tank Turkey are maintained again this week. Selling levels are between $795/t-$835/t in respect of the range of Group II grades, with partly-approved Group III base oils between $810/t-$845/t.

Middle East Gulf

Significant quantities of Group I and Group II base oils were moved out of Yanbu and Jeddah for receivers in Egypt, Sudan, U.A.E., Pakistan and India. In February around 70,000 tons will load for a variety of receivers in the usual ports.

Large quantities of Group I and Group II material are arriving into the Middle East Gulf region from Saudi Arabia. Confirmation was received that a part-cargo was booked from Kavkaz, Russia, in the Black Sea. The quantity is around 17,000 tons, and normally 10,000 tons of this would go into Singapore, with the balance discharged into Hamriyah. The SN500 price is estimated at $530/t-$550/t CIF U.A.E.

Mediterranean sources for Group I base oils made offers to a couple of receivers in U.A.E. Prices offered are considered uncompetitive against Saudi Arabian and Black Sea barrels. Levels are at $645/t in respect of SN500, SN150 around $635/t, with bright stock at $730/t. All CIF Hamriyah, U.A.E.

Russian export grades are assumed to be used in place of Iranian base stocks. No further cargo movements out of Iran were reported, but sources in U.A.E. still claim that small parcels of Iranian base oils move out of the country on an unofficial basis. Prices were discussed, but no clear debates took place on what these levels are. It was suggested that levels might be around $585/t in respect of SN500, landed into U.A.E.

An imminent turnaround program is planned for Al Ruwais refinery, although this will not affect Group II and Group III base oil production. The feedstock unit will come under maintenance. With sufficient stocks of Group III products, all existing markets will be fully covered and serviced.

Group III base oils exported from Middle East Gulf sources in Al Ruwais and Sitra have notional FOB prices maintained this week.

FOB levels are assessed between $630/t-$675/t in respect of partly-approved Group III base oils selling into Europe, U.S., India and the Far East. Eight centiStoke grades sold into Indian and Far Eastern locations will produce lower FOB prices, due to discounted local selling prices in those regions.

Nexbase-branded Group III base oils produced at Sitra refinery in Bahrain and marketed by Neste will have higher notional netbacks between $765/t-$825/t in respect of the three main Group III grades: 4 centiStoke, 6 cSt and 8 cSt.

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

Selling prices levels for Group II base oils – delivered in bulk to distributors and then resold throughout Middle East Gulf regions -remained unchanged, assessed on an FCA basis out of U.A.E. hub storage between $785/t-$920/t in respect of light vis grades 100N/150N/ 220N, and 500N/600N between $810/t-$925/t. These prices are based on FOB numbers from Far East and Red Sea, plus freight, storage and handling, and distributor costs and margins.

Cross-Mediterranean trade shows large parcels of Group III base oils moving out of Spain to affiliates and distributors in Antwerp-Rotterdam-Amsterdam, Israel and the west coast of France. Some 50,000 tons of Group III grades are loading this month. Also, a number of bright stock cargoes are moving into Alexandria to cover the first quarter Egyptian General Petroleum Corporation supplies. These parcels are loading out of Yanbu.


West Africa and South Africa are logistically combining with a cargo moving out of Antwerp-Rotterdam-Amsterdam and the United Kingdom, first discharging 5,000 tons of three Group I grades – SN150, SN500 and bright stock – into Tema in Ghana under the terms of the annual contract. The balance, around 11,000 tons of various grades will continue to Durban, arriving around the end of March or early April.

With one cargo completed out of the Baltic for Nigeria, the expectations are that at least one other will be fixed later this month. Two parcels of around 15,000 tons may be fixed for later this month, although sources indicated only one will come to fruition. The problem is trying to get the grade split right, since receivers in Nigeria are very specific on quantities of each grade due to limitations on tank storage in Apapa.

Prices in respect of API Group I base oils discharging into Apapa for Nigerian receivers are maintained this week with CFR/CIF levels, indicated between $645/t-$660/t in respect of SN150. SN500 is placed between $650/t-$665/t, with bright stock between $745/t-$760/t. Blended SN900 is maintained between $670/t-$685/t.

Prices are for the delivery of cargoes of at least 10,000 tons into Apapa port, Lagos, 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.

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

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