Europe

European API Group I prices have rebounded a little with offers around $15-$25/t higher than one week ago. Light solvent neutrals are least affected, but are rallying with levels between $835-$860/t. Heavier vis grades, more in demand for large export sales, are around $875-$895/t. Buyers have started looking at the market in earnest, with some considering that the base oil nadir has happened. Sellers appear to be more resolute, not giving way to counters from buying parties.

Bright stock has rallied, and numbers for this grade are $30-$40/t higher than last week, between $1045-$1070/t.

These FOB prices refer to large export parcels of Group l base oils, from mainstream producers in Europe and North Africa.

Domestic or local sales within the European mainland are around the same levels and market intensity as last week. Levels for local sales of Group l base oils throughout mainland Europe are around 50-65/t higher than export prices. This takes into account parcel size, extra handling and storage charges, and delivery by truck or barge.

European Group II prices have also stabilised, but more than one major supplier offers cargo-sized parcels of Group II grades at levels close to, if not below, Group l prices.

Prices are maintained much as per the last report, with the light vis grades 100N and 220N offered ex tank around $905-$930/t, with the heavier 500N and 600N between $920-$965/t. The upward move in Group l prices has helped to bolster Group II levels back to an acceptable premium over Group l grades.

A number of Group III suppliers have cut prices in response to buyers’ expectations. Many purchasers have been advised that prices changed Nov. 1, although many buyers were already receiving material at lower numbers. Prices have been discounted by as much as 30/t in some cases, although the norm would seem to lie between 20-25/t.

Prices for both European grades 4 cSt and 6 cSt are around 865-890/t, basis ex tank sales into trucks.

Baltic & Black Seas

Baltic trade has been subdued, with many suppliers and distributors withholding offers due to low or impossible margins on bid prices from traders. Others are tempted to try to clear inventory on the basis that prices may still come under further pressure from falling crude levels.

Prices for the two main grades have come off the bottom rung and are now reported at $810-$835/t, basis FCA, although more than one buyer has boasted he has booked cargoes below $800/t for large parcels of SN 500. SN 900 has been offered at $1008/t basis FOB, but this has been declined by buyers as too high. Sources confirm that counters of less than $975/t have been received for 3,000 ton parcels of SN 900, but these have been dismissed, since this grade is in demand, with few sizeable parcels available in the Baltic.

Black Sea prices have been raised by some $20/t, with suppliers unable to meet buyers bids for all types of material from Russia, Uzbekistan, and one small parcel from Turkmenistan. Turkish buyers are keen to fix cargoes in this market, since some have confidentially communicated that they believe that the market will adjust upwards over the next month. Others are saying that with year end approaching they expect inventory sales to start soon with prices dipping further. Prices are $810-$840/t basis FOB, for SN 150 and SN 500 grades, with CIF prices between $840-$865/t delivered into Aliaga or Gebze.

Middle East

Middle East Gulf prices for Group l are unchanged this week. This region was not subjected to the large downswings which were witnessed for around two weeks in Europe; instead prices remained relatively firm due in no small part to the lack of genuine avails for Group l grades. With large swathes of product diverted into Iraq and Syria, the normal avails of Iranian exports which filter their way out of southern Iranian ports through UAE and then to export markets are missing.

Those quantities which are available are $875-$890/t for SN 500, the principal export grade. Enquiries abound for parcels of bright stock with local UAE blenders tapping all contacts, east and west, to lay hands on the best deals. Offers have come from the U.S. and also from Far East sources, around $1095/t in one instance for a parcel of 4,000 tons.

Group II prices have been the talk of the Middle East Gulf regions, with fierce competition on numbers coming from traders loading parcels in the U.S. versus Far East source suppliers trying to hold on to market share. Prices have descended to new lows, with little differences in price between lower vis and higher vis products. All grades are $940-$960/t for November delivery, but many buyers are eagerly anticipating a yearend inventory clearance sale.

Sources this week expect prices to fall below $900/t for Group II grades, and in some cases these grades may be lower priced than comparative Group l viscosities. U.S offers mentioned in the last report have not yet hit the desks, but have been confirmed relating to parcels to arrive during December. Prices attached to these parcels may be close to $900/t CFR/CIF UAE ports.

Africa

This week sees the ICIS African Base Oil & Lubricants Conference under way in Cape Town, South Africa, and with many blenders and importers attending this event, the markets are quiet.

East African authorities are again clamping down on inferior finished lubricants, particularly in Tanzania and Kenya. This appears to be an ongoing problem, where land borders are difficult to control. The rogue material should not be confused with regular imports of virgin and recycled base oils which are routinely supplied through many ports along the eastern seaboard.

West African imports are building, and a number of planned cargoes are being negotiated for delivery between now and the end of the year. Group l and II material is being offered into this market, often co-loading with quantities of bright stock or variations of SN 900, available both from European and U.S. sources.

Many Nigerian receivers are concerned they may have missed negotiating cargoes at the bottom of the market, with this week’s news that European prices are starting to move back up. Forever the optimists, local sources commented this week that they envisage lower prices towards the year end, for cargoes which would arrive into Nigeria during January.

Price indications contained in offers this week have moved upwards, with Group l neutrals now around $920-$960/t, for both Baltic and mainstream European supplies. Bright stock is also stronger, with one offer for a 5,000 ton parcel around $1115/t, basis CFR Apapa. SN 900 offers are on the table between $1045-$1187/t, but the relative quality of each parcel has not been analyzed, hence there may be wide ranging spec variations between one cargo and the next.

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.