Pinpointing absolute levels for European Group I base oil grades is becoming nigh impossible. In bids to move stocks out of tank not just prior to year-end, but for sales into January, some offers are discounted even from buyers’ expectations. Some sellers believe that it is prudent for the market to take a break from the myriad spurious offers and bids, and see where prices fall in the new year.

Light solvent neutrals are $730-$745/t, with heavier grades such as SN 500 at $690-$720/t. Bright stock, whilst in apparent demand, had to come in line with other Group I grades, with some buyers commenting that it was ridiculous for this grade to be highly priced. Levels for bright stock have been trimmed to $975-$1000/t, with one supplier in the Mediterranean discounting by around $30/t to move stocks prior to year-end.

These FOB prices apply to bulk export parcels of Group I grades being made available and offered ex mainstream European and North African suppliers. Some prices being quoted by certain sellers are higher and lower than the ranges above, as the speed of price cutting has exposed wildly varying prices.

Local trade within main European markets has all but dimmed, with few buyers in the market, and many blending operations planning to close or run at minimum levels over the two weeks of holidays.

There are some oddball offers of Group I products in effort to clear tanks -such as truck deliveries in Benelux at lower levels than some export sales. Hence it is impossible to stipulate a premium to be applied to local or domestic prices over export sales.

Group II prices are falling to new lows, reflecting lower source production costs. These grades are being curtailed by the same degree of inactivity in the European market, and new offers will possibly have to be realigned for receivers in the new year.

Light vis grades carrying mainstream original equipment manufacturer approvals are $795-$820/t, with heavier cuts 500N and 600N between $810/t and $840/t. Light and heavy grades are $745-$765/t, and $770-$785/t, respectively.

Many Group III blenders are looking to curtail activity over the coming weeks, and have declined further deliveries, other than those contracted and booked forward. Levels for 4 cSt and 6 cSt are maintained at 790-820/t, basis ex tank sales, although both buyers and sellers have acknowledged that new purchases will need adjustments. Some receivers are privately commenting that they will be receiving retrospective discounts for December purchases, with further price cuts promised for January.

Baltic & Black Sea

Baltic prices for Russian export barrels have slumped again, although with lower ex refinery gate prices, margins may be protected. Refinery purchases are made in euros, which is fortunate, considering the rubles plight. With domestic markets collapsing within Russia, more exports are being targeted, and as long as sanctions do not affect outgoing barrels, business can be preserved.

With limited destinations and receivers in areas such as West Africa, opportunities are being curtailed, and only rock-bottom prices can tempt buyers to commit. The disparity between SN 150 and SN 500 has been extended, with parcels of SN 500 being offered at around $670/t basis FCA. SN 150 is still at a premium, offered in smaller quantities at $720-$730/t. FOB levels are subject to loadport, but can be $10-$15/t higher.

SN 900 will be available around the end of December and is being estimated at $765-$780/t basis FOB. Low vis bright stock, which can be sold in quantities of 500-1000 metric tons, is available ex main ports at around $825/t.

Black Sea trade does not appear to have resurrected, with Turkish importers relying heavily on Mediterranean Group I delivered at competitive rates. Out of southern Ukrainian ports, theres been only one large SN 500 parcel, being made available ex Theodosia. Over the last few weeks, Mediterranean cargoes loading out of Spain, Italy and Greece have accounted for more than 85 percent of Group I imports into Turkey. Products are still available ex Fergana, but the latest prices were unavailable.

Prices have dipped again, with one mixed parcel being offered CIF Gebze at around $738/t in respect of SN 500, and $1042/t for 700 tons of bright stock.

Another 4,000-5,000-ton Group II parcel has been pitched-but not yet fixed-into the Turkish arena, at $733/t for both light and heavy vis grades. A 2,000-ton cargo of bright stock has been offered into Aliaga for three receivers at $1049/t.

Middle East

Many Middle East Gulf buyers and receivers are content to plug holes in inventories with locally sourced products, or simply “waiting for gravity to take effect, as one player put it. Some larger blenders within United Arab Emirates are debating whether to buy now, offering low bids to clear inventories from producers before year-end, or to wait until they may be able to obtain material at even lower numbers. Having postponed buying larger parcels, some are experiencing very low stocks and may be tempted to buy minimal quantities.

Local prices have lowered again, with some reports of lower-quality SN 500 being available landed into U.A.E. ports at around $690/t in dollar equivalent terms. Imported Group I neutrals discharging into Oman and U.A.E. have been cited at $745/t CIF for both SN 150 and SN 500.

Bright stock remains the most sought-after Group I grade, with some looking to purchase large slugs from Europe or the U.S. With the European arbitrage now open for the supply from Mediterranean, in particular, offers of $1035-$1060/t, depending on quality and parcel size, are on the table.

Far Eastern Group II sellers appear to have retreated from the Middle East Gulf markets, commenting that with a number of turnarounds to production units in the early part of the new year, coupled with Chinese New Year holidays thereafter, they may experience constraints on avails.

However, other Group II and Group III production is about to commence in the New Year, at Takreer facility at Al Ruwais, and also from China, with the overall effect that Group II products will continue to show length in this market, and the region will surely experience oversupply in coming years.

Prices have been muted due to lack of offers, but any material finding its way into the Middle East Gulf, either from Far East or from U.S., will be very competitively priced-at $790-$835/t, for both light and heavy vis grades.

Africa

East African authorities are again clamping down on the importation of certain poor quality blendstocks which are being sold, in some cases, as recycled base oils. These can contain toxic materials such as furfural extract which, when blended with other oils, can yield a higher vis blend component. Until such legalization takes place, these lubes will be imported and used in finished oils. Prices are attractive, of course, with one seller offering to supply in drums at around $465/t delivered.

South Africa appears to have steered clear of such problem imports, with regular supplies of SN 500 ex Russian suppliers arriving into Durban at very competitive prices. Last offers for early January arrival were heard at $920/t CIF in flexibags.

West African receivers have started to reap the benefits of index-linked FOB prices when taking material under tender into ports such as Tema, in Ghana. Other receivers in Nigeria are still refusing to move on purchases unless guarantees are given by traders that on arrival at disport, CIF/CFR prices will reflect the current FOB prices at that time. These demands are being met in some cases by traders taking future positions on where prices will lie in say, one month’s time.

The results are that some offered prices appear to be exceptionally low compared to regular offers based on today’s economics. Prices below $700/t have been quoted for Group I neutrals, with bright stock levels around $900/t.

The few cargoes discharging within the next few weeks will carry prices based on loaded FOB numbers plus freight. These are $820-$835/t, in respect of SN 500, with bright stock from various sources between $985/t and $1040/t for bulk parcels.

Many Nigerian receivers are considering interim quantities of Group I material in flexies, hoping to ride out the declining prices to be able to buy cargo-sized parcels at the bottom of the market. Offers were at $860/t, basis CIF Apapa.

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