Group II reports contain news that prices are stable, although there are suggestions that levels are coming under pressure where new suppliers have attempted to enter the market. This incursion has generated some lower prices, which some have adopted as the norm.

Group III prices are assuredly coming under greater pressure, mainly from some suppliers who are discounting levels to increase market share. The effect is that all partly-approved and fully approved Group III base stocks are seeing prices trend downwards, with more active players coming on to the scene.

Crude oil has steadied through the last few days with dated deliveries of Brent crude stable at $64.30 per barrel, around $1 lower than last reported. This price is for September front month. West Texas Intermediate crude now posts at $57.50 per barrel, for August settlement. ICE LS Gas Oil has come off by some $15 per metric ton, now reaching a level of $578/t in July front month trading.

Prices were obtained from late London ICE on July 8.

Europe

European Group I export values are stable in a reportedly balanced market. Margins appear to be acceptable to most producers.

Prices remain between $550 per ton to $575/t for SN150, SN500 between $575/t-$600/t and bright stock ranging between $700/t-$740/t. The above price levels refer to large cargo-sized parcels of Group I base oils FOB from mainland European supply points, always subject to availability.

Domestic prices around Europe have also remained stable, with domestic sellers content to leave prices level with the past few months. With a healthy premium to export prices, sales have been particularly high with some blenders building inventories ahead of the summer recess. Many are tempted to wait now until after the end of August, however, with fears that crude and feedstock could impinge on prices now receding.

The differential between domestic and export pricing remains as last with domestic levels assessed 65/t-90/t higher than export prices.

Group II values are reported to be stable, with ample quantities of product around the markets. Players are awaiting information on the continuation of the import duty waiver on Group II base oils from the EU Commission, which should be forthcoming after discussions continue on this subject in mid-July.

FCA prices in respect of Group II base stocks remain unchanged this week and remain between $720/t-$815/t (640/t-730/t) for the light vis grades 100N, 150N and 220N, with heavier grades 500N and 600N between $750/t-$825/t (665/t-740/t). These price bands pertain to all Group II base oils, including majors approved grades and other smaller imports.

Group III prices are under pressure from increasing availability, but demand remains positive.

Group III levels remain unchanged and are put between 665/t-710/t in respect of 4 centiStoke grades with 6 cSt and 8 cSt base oils between 675/t-720/t. These prices are for partly-approved grades for FCA sales from hubs in northwestern Europe.

Fully-approved Group III prices also remain unchanged between 710/t-840/t in respect of 4 centiStoke product with 6 cSt material between 800/t-865/t, and 8 cSt grades between 775/t-835/t, FCA Antwerp-Rotterdam-Amsterdam. There is still evidence that some fully-approved material is being heavily discounted which is distorting the ranges for this particular type of base oils.

Baltic and Black Seas

Few parcels have been loaded in the Baltic. Prices for Russian export grades are unchanged with FOB levels for SN150 remaining between $475/t-$500/t and SN500 between $485/t-$520/t. Polish bright stock is indicated between $695/t-$725/t FOB, with some Russian bright stock available at discounted levels.

A smaller Kavkaz, Russia, parcel has loaded for Indian receivers and will comprise of around 4,000 tons of Russian export grades. Kavkaz, Russia, STS prices remain around $475/t in respect of SN500 with SN150 at around $465/t. SN900 is assessed at around $525/t.

Turkey has more economic woes after a run on the currency following the elections. Domestic blenders are only willing to take small quantities of European Mediterranean imports, relying again mostly on locally produced Group I base stocks. The problem is that local producers have had to react to the volatile currency and economic situation by increasing prices for base oils which is making local sales uncompetitive. Quantities of Group II are being supplied from Far East sources directly to blenders in addition to material from distributors representing the majors.

Levels for Group I base oils, basis CIF Turkish from Mediterranean sources, are being heard at around $595/t for SN150 and $600/t in respect of SN500. Bright stock is indicated at $775/t CIF.

Middle East Gulf

Red Sea reports include cargoes out of Yanbu, Saudi Arabia, and Jeddah, Saudi Arabia, with further loadings to take place during the remainder of July. Cargoes are moving to Oman, United Arab Emirates and India ports.

The United States has placed further sanctions on Iran, restricting movement of petroleum products out of the country.

Base oil exports are no longer being reported, although Iranian companies still maintain that this is business as usual, with a number of reported movements undertaken by U.A.E. companies. Levels are around $590/t, or equivalent in local currency.

Levels for Group I supplies from Far East sources are comparable with levels for Russian exports. Indication prices CIF U.A.E. for Black Sea loaded material are $548/t for SN150 and $553/t for SN500.

FOB price levels for Group III remain between $685/t-$725/t. However, 8 centiStoke grades moving to India and China will achieve lower contribution levels due to lower local selling prices.

The Group III Nexbase branded base oils from the Sitra, Bahrain, refinery marketed by Neste will be allocated higher FOB levels due to premium selling prices in destination markets, which is due to holding the full range of approvals including European original equipment manufacturers.

FOB levels remain unchanged and are assessed between $710/t-$875/t for 4 cSt, 6 cSt and 8 cSt grades delivered into European and U.S. markets.

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

Group II values are maintained as last reported with selling prices FCA from U.A.E. hub storage range between $795/t-$900/t in respect of the light vis grades 100N, 150N and 220N, with 500N and 600N between $815/t-$920/t.

Africa

Traders in North Africa are supplying cargoes loading out of Livorno going into Mohammedia in Morocco. North African reports indicate parcels of Group I base oils being loaded for discharge into Algeria.

Group I prices for cargoes moving into Nigeria continue to be assessed around the same levels as last reported with levels indicated between $685/t-$710/t for SN150, SN500 between $695/t-$720/t, and bright stock between $885/t-$925/t. SN900 is indicated at $710/t-$720/t.

Prices ranges cover all specifications of base oils. For example, where 95 VI is required by some blenders for SN150 and SN500, prices are represented at the higher end of the spreads. All prices are on the basis of CIF/CFR Apapa, Lagos.

The prices above refer to large cargoes of minimum quantity of 10,000 tons in total, landed into Nigerian ports.

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