EMEA Base Oil Price Report

With many players taking a short holiday week, buyers remain wary of price changes as API Group I and II base stocks remain relatively tight and only Group III products show length.

Dated deliveries of Brent crude levels have been eroded by some $2 per barrel to around $68/bbl for June front month settlement. West Texas Intermediate crude is weaker too, at around $63.25 per barrel for May front month. ICE LS Gas Oil levels dropped $5 per metric ton to $610/t for April front month on Monday afternoon in London.

Europe

With turnaround season in full swing, large parcels of mainland Europe-based API Group I are still extremely short and export prices are maintained, with light neutrals at $810/t-$825/t, heavier solvent neutrals SN500 and SN600 at $855/t-$885/t, and bright stock offered between $975/t and $995/t, from one identified source - all on basis of FOB.

Some have said that new, higher Group I prices in local markets levied w.e.f. April 1 must be an April Fools joke, as theyve leapt above those being offered for Group II.

Increases to local prices were on the cards as a result of export numbers escalating to new heights, but the extent of some of the increases was not appreciated previously.

While buyers continue negotiating, their one hope is that feedstock levels will continue to move downwards, easing some pressure on refiners and suppliers to continue hiking prices. The price differential between export and local sales is now assessed between 40/t and 65/t.

European Group II markets remain stable to firm. There have been no marked changes to prices, although sellers have suggested that prices may come under review in coming weeks.

FCA levels for Group II sales remain $900/t-$920/t (725/t-740) for light vis oils, with the heavier grades at $970/t-$990/t, although there may be individual buyer variations.

European Group III markets are stable. Russian material is reportedly being imported at very low prices of 775/t-795/t. These grades are largely unapproved, but still maintain the higher specification properties of fully-approved Group III oils. Some smaller users that could benefit from these lower-priced products are expressing interest. Market shares are all-important to suppliers and any erosion of market position is seen as a real threat to some incumbents. Fully-approved grades still enjoy a privileged status, as a reward for all the time and resources spent in approval processes.

Prices are maintained at $910/t-$930/t CIF for the 4 centiStoke and 6 cSt grades discharging into Antwerp-Rotterdam-Amsterdam and northwestern Europe. Euro-based FCA sales are pitched at 865/t-880/t in respect of 4 cSt and 6 cSt grades for partly-approved grades. Fully-approved ACEA- and European original equipment manufacturer-approved oils sell at premiums of 895/t-920/t for the 4 cSt and 6 cSt grades, with 8 cSt material around 880/t-895/t basis FCA Antwerp-Rotterdam-Amsterdam.

The latter prices are FCA or truck-delivered smaller lots of Group III being sold to local blenders, as opposed to bulk cargoes for large users such as major blenders or additive manufacturers.

Baltic and Black Sea

Some distributors are struggling to find sufficient stocks to supply all current requirements. With Russian refinery turnarounds only just starting to wrap up, and supplies still under threat from pending policy changes to Russian exports, the market is under constant review.

There have been few spot deals on which to base any real changes to levels, which are at $720/t-$755/t for SN150 FOB and $785/t-$825/t for SN500. SN900 is estimated at $865/t-$895/t FOB, and bright stock from the southern Baltic is $945/t-$985/t.

Further large export cargoes from Kavkaz, Russia, in the Black Sea appear to be in the planning stages for April and May loading. With previous receivers in Singapore, India, United Arab Emirates and Antwerp-Rotterdam-Amsterdam, supplies to these locations seem to be in rotation for STS loading out of the mother vessel in Kavkaz, Russia, for the heavier Russian Group I grades such as SN500 and SN900.

Prices for offers of Mediterranean-supplied material delivered contractually are reconfirmed this week to be in line with European Group I export numbers. Levels were heard at $855/t-$875/t for the range of light neutrals, with SN600 and SN500 landing between $895/t and $925/t CIF. Group III prices ex Mediterranean are established at $890/t-$920/t CIF in respect of 4 cSt and 6 cSt grades.

Red Sea reports suggest that the Aqaba, Jordan, requirement has been fixed from Mediterranean sources, although final confirmation is pending. Saudi Arabian Group I and Group II exports from Yanbu and Jeddah continue to dominate inquiries.

Middle East Gulf

Iranian Group I cargoes are reportedly available again from Bandar-e Emam Khomeyni (BIK), but are not as prolific as they were a few months back. Some suggested these availabilities will go into the west coast of India or Pakistan. Prices for Iranian parcels are estimated to be $800/t-$820/t FOB in respect of quantities of SN500. United Arab Emirati receivers have also bought material locally that will discharge into Sharjah in coming weeks.

The decision regarding the large Black Sea cargo which is understood to now be on the high seas is still pending. This parcel could go into the west coast of India, and possibly at a lower price. Premium Group I cargoes have been nominated from Italy and also from Red Sea supply points.

Middle East Gulf Group III export prices from suppliers operating out of Al Ruwais moved up, with a number of sources suggesting that the producer is increasing delivered prices to distributors and other large receivers. However, some prices for material into India have reportedly been dropped to compete with Group II suppliers that may be offering exceptionally low prices by using Singapore distillate pricing as a yardstick.

Other Group III loaded prices are estimated to be higher overall, with netback levels assessed at $765/t-$785/t FOB in respect of the 4 cSt and 6 cSt grades. Partly-approved Bapco Group III material is estimated to load at similar levels, but fully-approved Neste barrels from the same Bahrain refinery at Sitra are 830/t-$855/t FOB. These nominal FOB levels are established through netbacks ascertained using published shipping rates and landed prices provided by a number of sources and are subject to cost allocation procedures by each individual company.

Group II base oil grades ex Yanbu are believed to have been loaded for receivers in U.A.E. again, and although prices have not been revealed yet, sources in Sharjah suggested that prices will be very competitive - although not at those levels given for material delivered into the west coast of India.

Local sales within or ex U.A.E. in respect of Group II base stocks on an FCA or truck-delivered basis remain at $895/t-$920/t for the range of light grades of 100N/150N/220N and between $1000/t and $1045/t for 500N/600N. These prices are based on imports from the U.S. and Far East, which have been the main Group II sources previously.

Africa

Following the U.S. Gulf Coast-based Group I cargo of around 12,000 tons discharging into Apapa during April, further supplies from the same source are being investigated for May and June.

The Ghana base oil tender will remain independent from other supplies going into Conakry, Guinea, and Abidjan, Cote dIvoire, where receivers will possibly be supplied on the back of cargoes which will also discharge at a Nigerian port. The supply source for this Group I hasnt been disclosed but is believed to be from the Mediterranean or elsewhere in Europe.

Some buyers in Nigeria have also indicated that they might be willing to consider taking quantities of Group II grades should prices and availability suit the required slate. It remains to be seen where this supply could originate, although there are a number of options from the U.S. and other sources. Buyers have initially indicated that shore storage would not be a problem, and that they could accept large cargoes of up to 15,000 tons of Group II grades.

Sources in Nigeria announced urgent requirements for a number of Group I cargoes from any source - including, but not limited to, Europe, Baltic, and the U.S. Gulf and Eastern coasts. They would also look to load out of the Black Sea on an STS basis, but assembling the required grade split may prove to be difficult from that source, which only offers limited supplies of very heavy material.

Nigerian receivers said they are prepared to enter into contracts, where monthly or quarterly quantities would be agreed in advance with a supplier, and pricing would either be on a spot basis fixed at time of supply, or on an index-linked formula.

Large parcels of Group I landed into Apapa, Nigeria, are $885/t-$920/t in respect of smaller quantities of SN150 or other light neutrals, with SN500/600/700 at $950/t-$985/t, and bright stock between $1040/t and $1065/t.

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