EMEA Base Oil Price Report


The seasonal rise in demand that would normally take shape at this time of year appears as if it may pass by base oil markets this year due to the ongoing crisis caused by the COVID-19 pandemic.

Base oil producers, resellers and blenders would normally have been anticipating a buoyant upturn in activity with lubricant operations gearing up for the spring and summer seasons when demand typically revives from winter doldrums in the northern hemisphere. Even in southern climes in Africa business normally ramps up now following the hot summer and rainy seasons.

Sadly this is not the case this year, with base oil demand suppressed in almost all regions, and with only a glimmer of hope for a slow and perhaps unsteady climb out of the mire. Base oil demand has been suppressed because of various measures taken to control the spread of the disease, while at the same time base oils have also faced supply constraints due cutbacks in refinery operations.

Some market sources have said that were it not for the reduced demand levels, then the base oil markets would be a dire position, but it is worth remembering that without the pre-cursor of the pandemic and the effects thereof, both supply and demand would be a more positive place possibly more akin to “normal.”

There are signs that growth and demand may be returning to certain core markets, and with OPEC maintaining a lower cap on output, crude oil prices have started to move upwards over the past week to levels not seen for almost a year. Dated deliveries of Brent crude breached another psychological barrier this week, continuing a steady climb to reach $60.20 per barrel, now for April front month settlement. West Texas Intermediate crude rose to $57.25 per barrel, still for March front month settlement.

ICE LS gas oil prices increased by $43 per metric ton since the previous report, mainly due to crude pricing rather than demand for this product. ICE gas oil now posts at $493/t. These prices were obtained from London ICE trading late Monday.


Export prices for European API Group I base oils are again moving upwards but at a slower pace than previously. Some buyers said they cannot accept higher prices from the small number of suppliers offering product since their receivers in export destinations are unable and unwilling to pay higher levels for material delivered into local markets. This is the case for trade into West Africa, the Middle East Gulf and the West Coast of India – the main export destinations for European supplies.

There have been attempts to open up arbitrage markets from parts of Europe such as the Baltic and Black seas to destinations in the United States and South and Central America, although limited availabilities makes such opportunities long shots.

Prices are firmer by some $5 to $15 per ton, with the heavier neutrals being more in demand and thus attracting higher numbers. Solvent neutral 150 levels are now between $750/t and $780/t. SN500 is at $815/t-$855/t, and bright stock in large quantities remains elusive, seeing levels in two offers at around $945/t. The range for bright stock prices is assessed at $925/t-$975/t, purely depending on agreed selling prices at destination, where some receivers are in desperate need to be able to lay hands on product at almost any price.

The above prices 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.

The rather strange anomaly of regional or domestic prices remaining below those applying to export sales continues with the dearth of larger quantities of material largely unavailable for export, and demand for those limited avails exceptionally high. This pricing scenario would be the first instance of a reversal for some thirty years, when the last occasion was a situation encountered was during the Iraqi invasion in 1991.

However, prices are firmer in local markets, with levels responding to corresponding increases in the export scene. But sellers are also aware of maintaining contract supplies at agreed tariffs to customers who buy on longer term pricing arrangements. There is also an element of the differential between Group I prices and those applying to Group II. Group II grades could possibly be substituted as a permanent solution. Thus Group I local suppliers and resellers are found between a rock and a hard place, not wishing to lose longer term supply commitments, whilst at the same time not selling at negative levels.

Prices were moved upwards from February 1 with some sellers establishing the right to two weekly reviews rather than establishing monthly agreements. This flexibilty would enable sellers to react to any uneventuality in the market place

The differential between export and domestic pricing is adjusted following increases in both camps. The differential is now assessed between €35/t-€55/t, export levels being the higher.

Group II prices are firmer reacting to a possibility that these base oil grades could also face supply restrictions mainly due to local European production anticipating a lack of sufficient feedstock to produce output to meet slightly rising demand for these grades. This has developed into a scenario where prices have started to rise, both on the back of the feedstock issue and also the current rises in Group I numbers.

Demand is being stirred by the current and impending moves to higher ACEA requirements for lubricants in respect of European PCMOs and HDMOs. Legislation is due to be reviewed towards the end of this year with further tightening on specifications and formulations for finished products.

The other main news in the Group II camps is that the EU Commission’s ETG have decided to reduce the tariff quota for Group II imported grades from July this year until year end to 150,000 tons. This is a move downwards by 50,000 tons per six month period. A subsequent review for 2022 will take place in May. The rationale behind this decision has not been disclosed and all but one European Lubricant Association has expressed disappointment and dismay at this decision. This action could have a detrimental effect on smaller blending operations who have no choice other than to purchase imported Group II grades at higher prices, on the basis that imports from countries without an FTA and which are above the tariff quota limit will have a duty of 3.7% imposed.

As prices move higher so does the duty element, raising prices for imported material. While the pandemic has reduced demand throughout 2020, the European market is still currently estimated at around 1.4 million tons per annum, down from 2019 levels, but still substantially above domestic nameplate production levels. FTA supplies material can make up some of the leeway, but if demand returns to pre-coronavirus levels in the future, supplies of Group II grades into EU locations may not be guaranteed.

Prices are lifted after new levels from the beginning of February, with levels now being assessed at $945/t-$975/t (€777/t-€805) for 150 neutral and 220N, and $1,065/t-$1,100/t for 600N. These levels also reflect a stronger euro exchange rate against the dollar.

These prices apply to a wide range of Group II base oils, including European, and U.S. products with full slates of finished lubricant approvals but also those from the Middle East, the Far East and the U.S. without approvals or with only partial slates.

European Group III markets remain tight with maintenance turnarounds for two of the major producers and suppliers of fully-approved Group III grades imminent in the next couple of months. These sources have announced that coverage of supply will be guaranteed but already one of these suppliers has started limiting supplies to a number of buyers during the first quarter of the year.

Competition for all Group III production is also increasing from alternative markets such as China, India and the U.S., thus spreading the availabilities from current production more thinly than previously.

Prices remain firm with limited supplies and little spot availabilities with March offer levels between €800/t-€855/t in respect of the range of partly-approved Group III base oils. Levels are assessed at €830/t-€855/t for the 6 cSt and 8 cSt grades, at €800/t-€820/t for 3 and 4 cSt, all on an FCA basis ex Northwestern European hubs.

Group III oils with full European OEM approvals are now at €865/t-€900/t for 4 cSt, with 6 and 8 cSt grades at €880/t-€910/t.

Baltic and Black Seas

Baltic trade remains scarce, with only a few fixtures for cargoes out of that region, although a number of inquiries for material from suppliers for Russian export barrels of Group I material emanate from the Baltic regions. A major Russian supplier booked a cargo to load out of Kaliningrad for receivers in Singapore. This unlikely logistical occurrence is perhaps to supply contracted buyers in the Far East, where supplies may be difficult from the same supplier’s locations in the Black Sea. The river system on the Volga may have ice problems at this time of year, with rail or land bridging also perhaps logistically difficult. 

Another parcel from the same source is offered into the U.S. Gulf Coast, although how the economics of this cargo stack up is unknown. The parcel will likely be either loaded from the southern area of the Baltic or from a northern Latvian port not normally associated with smaller cargoes of base oils. This parcel is planned for loading during February. One other Antwerp-Rotterdam-Amsterdam cargo was moved from other Baltic distributors during the first few days of this month. Additionally, it is noted that a medium sized cargo was bought from Gdansk for receivers in Gebze, Turkey. This parcel consisted of some 2,500 tons of API Group material that is considered a cargo of bright stock, which may not have been available from usual sources in the Mediterranean. 

One Nigerian inquiry is seen in the Baltic market 6,000 tons to load out of two Baltic ports. With some grades such as SN900 and bright stock only available from some sources, this trader’s cargo may have to load from both ports to achieve the parcel split. The cargo is programmed to load early next month.

Prices for material loading out of the Baltic are difficult to assess. Sources suggested very little material available is on a spot basis, and that firm requirements will be negotiated with Russian refiners on a cargo-by-cargo basis. That is only after satisfactory contract and financial instruments are put in place. This is particularly the case where new buyers are concerned, since there have been quoted instances of flaky inquiries received from parties in the recent past.

Levels for FOB sales are assessed at new highs, with SN150 at around $700/t-$730 per metric ton, SN500 around $785/t with minimum of 95 viscosity index bright stock at $900/t. Blended SN900, if available, is estimated to be priced around $825/t. The market in the Baltic is in a state of flux, with prices moving in response to availabilities. Hence, some levels may reflect higher or lower numbers should sellers wish to move product quickly or perhaps retain availabilities of material.

Black Sea activity is rather muted, with the Volga river system difficult at this time of year due to ice build-up. However, one 6,000 tons cargo loaded out of an Azov port for Turkish receivers in Gebze, Turkey. This is the first Russian export cargo to move directly into Turkey for some time, perhaps reflecting the scant availabilities both locally from Izmir, and also from routine supply sources in the Mediterranean.

The Kavkaz, Russia, STS facility in the Black Sea is quiet, perhaps due to weather constraints, although further material is due to load before the end of February. Indian buyers are interested in purchasing further material from this source as are receivers in United Arab Emirates. Both parties bought Russian barrels from this source previously and are looking to repeat the arrangement.

Latest STS prices are slightly higher, with levels at $700/t-$725/t for SN500, with SN150 at $680/t-$695/t.

Group I grades going from the Mediterranean into the Turkish market are missing this week. With tight availabilities from both Livorno and Aghio, it may be difficult to cover Turkish requirements. Sources in Turkey comment that demand is depressed at this time, with the local markets still in the grip of the COVID virus. Locally it is said that it may be until summer before any semblance of recovery will be seen.

Any remaining availabilities for Group I base oil prices out of the Mediterranean are hiked higher, to around $855/t for SN150, with SN500 leveled at around $885/t. Bright stock, if loaded out of Gdansk, is estimated to land into Gebze, Turkey, port at around $1,025/t.

Prices for Group II and Group III base oils sales FCA Marmara ports are higher and are placed at €825/t-€865/t for low vis Group II grades, with the higher vis 600N at €925/t-€955/t.

Group III grades are assessed at €885/t-€910/t for 4 centiStoke material, with 6 cSt grades at €890/t-€925/t and 8 cSt material at €880/t-€920/t.

Middle East

Red Sea reports the usual number of large cargoes loading out of Yanbu and Jeddah for receivers in Mumbai. Cargo is loaded towards the end of January for supply into the west coast around mid-February. A further parcel of around some 16,000 tons of both Group II and Group I base oils is due to load first half February for first call discharge in Fujairah. The balance of the cargo will discharge at Mumbai anchorage thereafter. Other inquiries are for supply into Pakistan and the United Arab Emirates.

In Middle East Gulf regions there is news regarding the coronavirus spread, with many companies again observing lockdown procedures, and hospitality venues closing for a number of weeks. Trade around the region has been difficult, although a number of blending operations have been able to proceed and are producing finished lubes, albeit for diminished local markets. Export markets into East Africa were also badly affected.

Iranian trade has up until now been completely missing from the scene; however, there was a shipping enquiry to lift 6,000 tons of Iranian Group I grades out of BIK at the end of January. Whether this cargo was eventually loaded is difficult to appraise at the moment, because the destination was Mumbai, and no local Indian source can confirm the arrival or imminent arrival of such a parcel. Local information from U.A.E. sources indicate that shipping may have been difficult, and that the cargo is still in tank to be moved.

However, the same sources indicated that Iranian prices were reviewed. They are assessed at around $765/t, basis CFR Mumbai anchorage, with this number yielding an FOB level at $695/t-$720/t, depending on freight costs.

Group III base oils from Al Ruwais in U.A.E. and Sitra in Bahrain have notional netbacks assessed higher. The increases are aligned with higher selling prices in export destinations in Europe, India and China.  Also, small cargo that has moved from Al Ruwais to Sharjah has confirmed FOB levels, which could be compared to the notional netbacks.

Netbacks are indicated at $835/t-$875/t for 4 cSt, 6 cSt and 8 cSt partly-approved Group III base oils. The range of fully-approved grades from Bahrain will yield higher netbacks due to the pricing differential in export markets. These grades may netback at $900/t-$945/t for the 4 centiStoke, 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 moved slightly higher from the beginning of February and are assessed at ranges of $895/t-$925/t for light vis grades 100N, 150N and 220N, with heavier 500N and 600N grades at $935/t-$975/t. The wide range takes into account various base oils supplied from different sources such as the Far East and Red Sea. These were delivered into the U.A.E. in both bulk and in flexies, with varying contract terms and selling conditions.


South Africa shipping agency sources intimated that major will load a further large European cargo during the second half of February, with an estimated arrival into Durban port around March 25-31. This cargo will consist of Group l, Group II and Group III base oils, although relative quantities are not declared at this time. This cargo follows a number of similar parcels supplied into the South African markets for both in-house and third party blending operations. 

In West Africa there appear to be four relatively firm inquiries for Group I cargoes to move into the region during the next month or so. Three of the cargoes are trader-sponsored, while one parcel loading out of Rotterdam may be on behalf of the incumbent supplier for the Ghana supply contract, with 5,000 tons of three Group I grades loading for discharge into Tema.

One cargo is already identified loading out of Greece, with some 15,000 tons of three grades, SN150, SN600, and SN900 bound for Apapa port in Nigeria. The other parcels include one loading from Livorno and the other potentially loading 6,000 tons out of two Baltic ports during March, again for Lagos.

CFR/CIF levels for Group I base oils to be landed into Apapa in Lagos are now hiked higher to reflect the latest FOB levels, which will apply to these purchases. The market in Nigeria is relatively tight in supply terms, hence sellers will be able to offer higher prices with impunity.

Levels are now suggested at $895/t for SN150, SN500 at $965/t, with higher specification SN900 with VI min 95, at around $995/t. Bright stock, still unavailable on some cargoes, will have indications only at around $1,075/t.

The Baltic cargo, not loading until March, may reflect higher price levels, depending on whatever takes place in the market between now and final negotiation on the parcel.

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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