EMEA markets are reported as being weak to stable with the holiday season merely extending a period of largely unchanged base oil prices.
Dated Brent crude oil levels are hovering at $108-$111 per barrel, with gentle spikes just over $111, while West Texas Intermediate maintains the crack at around $99 per barrel. With ICE gas oil showing some strength towards the end of last week at around $945 per metric ton for front month settlement, a few renewed external pressures are being brought to bear on base oil prices.
European API Group I numbers are largely speculative due to the lack of deals reported. Some small weaknesses have been reported against last weeks levels which are reflected at both ends of the spreads. Levels for light solvent neutrals are now $930-$945/t, with heavier neutrals such as SN 500 at $955-$970/t. Bright stock remains around $1100/t, but with a couple of offers for prompt loading slightly lower.
There are rumors that some sellers have asked for pre-payment in return for special low prices for prompt Group I material to be loaded even at the beginning of January. This adds weight to some suppliers trying to minimize inventory at year end, since whilst the base oil may still be in the sellers tanks, for accounting purposes the material has been sold and hence is deemed having moved out of stock.
Local prices are untouched and will probably remain so until after New Years. With many finished lube manufacturers closed for two weeks, very few purchases or deliveries are taking place over the festive period. Estimated levels are pitched slightly higher over export numbers, due to the trimming of the export prices, and are now 65-80/t higher.
Baltic and Black Seas
Baltic prices for Russian and Belarus material remain at the low levels reported last week with one loading for SN 150 and SN 500 around Jan. 1, being pitched at $850 and $860/t respectively. No reports of any large West Africa-bound vessels are around this week although one supplier mentioned that one vessel was delayed but would probably load prior to end of December. The parcel is reported to be around 8,000 tons of two grades, SN 500 and SN 900. The SN 900 price level has not been disclosed but is estimated to be around $900-$920/t basis FOB.
Black Sea markets are distinct in that no business has been reported for any cross trades, with Turkish buyers commenting that they are waiting until January before looking at re-stocking with Group I Russian or Uzbek base oils.
Middle East
The Maghreb and Near Middle East regions are also very slow, with the Syrian problems contributing to a real change in the way that base oils are sold and supplied into these regions. Small deliveries continue to be made on a cross-border basis, from Turkey, Jordan and sometimes Iran.
Red Sea activity has also slowed, since even if the nationals do not officially celebrate during this period, many expats who work in the supply chain have left for a few weeks, with the result that overall business slows due also to receivers being absent from office and desks.
Middle East Gulf reports are that large quantities of Group I base oils are being offered into the region with supplies coming from Iran, Saudi Arabia, the Black Sea, and strangely, the U.S. The latter perhaps pertains to bright stock offers, some of which have been pitched as low as $1075/t CIF United Arab Emirates ports.
Iranian SN 500 is being offered for sale on two levels, one for FOB sales ex BIK, and the other for FOB sales of re-exported material from U.A.E. Direct exports are reported at around $905/t, although priced in local currency, whilst re-exported bulk SN 500 is being offered at $920/t FOB.
Imported and locally produced higher quality Group I material is priced around $1015-$1055/t in respect of solvent neutrals, with bright stock around or just below $1100/t, similar to European FOB levels.
Africa
East Africa reports that there could be a growing number of blending plants opening up in the near future, perhaps increasing an import demand primarily for Group I base oils. Whilst the majors hold most of the market share in this region, many smaller operators are now getting into the game with blending spreading into landlocked countries in the hinterland. Prices are kept relatively high in this area, appealing to many suppliers of flexies to partake in this market from supply hubs such as U.A.E., India and Saudi Arabia.
South African refiners sell a lot of product into East Africa, with their affiliates running the local businesses. Prices for bulk Group I base oils delivered into ports such as Mombasa and Dar-es-Salaam are pitched at South African levels plus freight and storage, which maintains levels around $1155-$1175/t for SN 500, with bright stock in small quantities around $1250/t.
Many smaller blenders opt to use recycled base oils, due to the lower specifications required by end users. These are lower in price by some $100-$150/t.
West African reports this week contain more news of cargoes arriving, or about to arrive, bringing the totals for import in these regions to more than 60,000 tons of base oils over the last six weeks. Prices remain as quoted in the last report, with Group I medium to heavy neutrals at $985-$1045/t. One import of an SN 900 grade is reported at $1008/t basis delivered CIF Nigerian ports, but the specification and quantity of this product are not known. Baltic loaded SN 900 is considered to be slightly higher priced at around $1025/t for cargoes arriving presently into Nigerian ports.
Bright stock imports vary depending on source with one buyer quoting prices for a U.S parcel at $1065/t, European loaded bright stock is being offered and accepted at around $1170 for smaller parcels, with one large cargo of around 6,000 tons being priced at $1138/t.
Group II/III
European Group II prices remain as per last week, amid few reports of any new business taking place. Levels are left at $1065-$1090/t for the range of light grades, mainly 150N, with 500N between $1125-$1185/t.
Similarly, Middle East Gulf Group II prices are unaltered with some reports of new offers for January and February deliveries at slightly higher levels. These latest numbers are not supported at buyer level yet, but with some Indian producers increasing prices some $10/t, Middle East Gulf importers may be facing a similar hike.
Levels are maintained throughout the holiday period between $1030-$1045/t in respect of the range of light viscosity grades, with heavy vis material such as 500N and 600N between $1120-$1145/t. Prices all basis CIF U.A.E. ports.
European Group III prices are being reported as exactly same as last week, since with few deliveries of these grades taking place between now and end of year, numbers remain at 910/t for 4 cSt grades and 920/t for the 6 cSt material, basis ex tank Antwerp-Rotterdam-Amsterdam.
Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Contact him directly at pumacrown@email.com.
