Base oil prices throughout Europe, the Middle East and Africa appear to have stabilized due to increased supplies of API Group I and Group II, ample availabilities of Group III and reduced demand. The dip in demand may reflect relatively full inventories and the on-coming summer holiday season in Europe.
At the same time, crude and feedstocks continue to trade weaker this week as dated deliveries of Brent crude marked time at around the same levels as last week, at $75.60 per barrel, now for August front month settlement. West Texas Intermediate crude trades lower at $64.90/bbl for July front month. The crack between the benchmarks is wider than normal, perhaps reflecting higher inventories and lower demand for products in the United States, although the specter of sanctions against Iran still hovers menacingly.
ICE LS gas oil fell this week to around $667 per metric ton, still for June front month. Prices are from late ICE London trade on Monday.
European Group I export prices still show some strength, although sellers now seem prepared to accept small counters to offers, whereas previously their attitude was one of take it or leave it. Some traders suggested that they now have options in choosing suppliers, unlike the past few months when it was difficult to obtain desired grades and cargo splits.
Prices are unchanged at $875/t-$895/t for light solvent neutrals and $925/t-$955/t for heavy-viscosity solvent neutrals. Bright stock prices may not have dropped dramatically, but sellers are certainly showing flexibility with values now between $975/t-$995/t. These prices pertain to large cargo-sized parcels of Group I available on an FOB basis ex mainland European supply points, always wherever and whenever available.
Prices for Group I sales within Europe appeared to have peaked as there were few reports of significant hikes from June 1. There have been some minor upward adjustments to specific grades, but values have generally stabilized and in some cases dipped.
Sellers and buyers both noted that prices are not falling and remain around levels reached at the beginning of May. Most maintenance turnarounds in Europe have been completed, so availability is no longer seen as an issue, especially since demand may tail off during July and August.
The differential between export and local sales prices is unchanged at 30/t-80/t, export prices being lower.
Group II prices have also stabilized the past few weeks. European trade is heating up, with suppliers keen to retain - or gain - market share. ExxonMobil is scheduled to open a large new plant in Rotterdam around the end of this year, and suppliers are keen to cement relations with customers.
FCA prices appear marginally weaker than previously published, although there is no consensus of big markdowns. Light-viscosity grades are at $975/t-$1,020/t (845/t-870), while 500 neutral and 600N are $1,055/t-$1,075/t (905/t-920).
Group III prices were increased effective June 1 and are now back to levels seen some 15 to 24 months ago after an unscheduled shutdown of the Shell and Qatar Petroleum plant in Ras Laffan, Qatar, caused big escalations. Prices gradually eroded from those levels after the plant resumed normal operations last summer.
Six centiStoke oils remain tighter than other grades at this time, creating pressure for a premium over 4 cSt stocks. FCA sales in euros are now 765/t-780/t for 4 cSt oils with partial slates of finished lubricant approvals, 785/t-800/t for 6 cSt and 785/t-790/t for 8 cSt. Base oils carrying full slates of ACEA and European OEM approvals are assessed at 800/t-825/t for 4 cSt, 820/t-845/t for 6 cSt and 825/t-850/t for 8 cSt, on an FCA basis from Antwerp-Rotterdam-Amsterdam.
The latter prices are for small parcels sold ex rack or delivered by truck, as opposed to bulk cargoes to large users such as major blenders or additive manufacturers
Baltic and Black Seas
Baltic availabilities have improved greatly the past few weeks, and prices now appear stable. There is no further news of inquiries for large export cargoes for West Africa, so suppliers seem content to rely on markets in mainland Europe such as Antwerp-Rotterdam-Amsterdam, the United Kingdom and Scandinavia. Offers have also been made for parcels moving into North Africa, the Middle East Gulf and India, although freight rates make such shipments impractical unless substantial volumes can be loaded.
Prices are unchanged at $850/t-$870/t for SN150, $920/t-$945/t for SN500, $955/t-$980/t for SN900, and $920/t-$1,045/t for various grades of bright stock, all on on FOB basis.
Reports from the Black Sea describe another large cargo to load on an STS basis at Kavkaz, Russia, apparently destined for Singapore, and rumors suggest that another parcel may be loaded for Rotterdam. There have also been inquiries for Russian material to load ex Black Sea for receivers in the Middle East Gulf, although potential receivers may be seeking base oil feedstock rather than refined base stocks.
Mediterranean cargoes of Group I base oils have been announced for June loading going into ports such as Gebze and Derince, Turkey. Prices were reported at $925/t-$950/t for light neutrals and $965/t-$980/t for SN500 and SN600, basis CIF.
Bulk deliveries of fully approved Group III base stocks ex Mediterranean are now assessed to be under offer into Gebze at around $900/t-$940/t, on a CIF basis for 4 and 6 cSt grades, or the equivalent in euros. Partially approved Group III parcels have been discussed for arrival into Gebze, with partial cargoes potentially being offered into other ports in Bulgaria and Romania.
Middle East Gulf
Red Sea traffic includes a number of cargoes ex Yanbu and Jeddah, Saudi Arabia, being primed for loading during June for destinations on the West Coast of India, the United Arab Emirates and Sudan. Yet another inquiry has been placed for material to be delivered into Aqaba, Jordan.
A small quantity of Iranian base oils, in addition to quantities of rubber process oil, is being offered into India, and the same parcel may also be under offer into the port of Hamriyah, in Sharjah, U.A.E. Prices have not been released, but one source reported a level of $825/t-$840/t, on an FOB basis from Bandar-e Emam Khomeyni, for SN500.
Group III grades continue moving out of the U.A.E., Bahrain and Qatar, with the former two locations sending large parcels into the West Coast of India. A the market for Group III has been firmly established there, some say at the expense of Group II grades from Far East producers. In certain cases these two types of base oils can be substituted for one another, and choices may be made based on price and availability.
Last weeks report stated incorrectly that actual or notional FOB rates were maintained, when in fact they decreased according to input from receivers in various locations around the globe. This week however, they are unchanged at $795/t-$820/t, basis FOB, for both 4 and 6 cSt grades from Al Ruwais, U.A.E., with partial slates of approvals. Similar numbers are afforded to Group III oils shipped by Bapco from Sitra, Bahrain, while the same oils, sold by Neste with full slates of approvals, are around $835/t-$865/t.
These numbers refer to FOB values established on a netback basis using published shipping freight rates and CIF/CFR prices reported from various sources.
Buyers in the region, especially in the U.A.E., continue showing strong interest in Group II ex Yanbu. There are also a number of inquiries for Group II to be delivered in flexitanks into the U.A.E. on a CIF basis, or alternatively buyers are prepared to purchase on the basis of ex-tank supplies from Al Ruwais or Yanbu if these options cam be made available.
Local U.A.E. supplies are available on an FCA, truck- or flexie-delivered basis and at the moment are priced at $1,025/t-$1,060/t for 100N, 150N and 220N and $1,120/t-$1,170/t for 500N and 600N. There have been reports of 500N being offered at $890/t ex-tank U.A.E., although quality and specifications have not been released for this attractively priced Group II material.
The Ghana cargo of three Group I grades ex Livorno will discharge into Tema in the next couple weeks, as will a parcel being shipped from the U.S. Gulf Coast to Apapa port, in Lagos, Nigeria.
Another large shipment of Group I from the U.S. Gulf Coast may load later this month after shipping has been finalized and fixed. The notion that this cargo was to include quantities of Group II grades now appears to have been unfounded.
Prices for Group I in Nigeria appear to be a little softer in some offers heard during the latter part of last week, although none of these offers has yet been confirmed. Prices have not changed much, but there is talk that an offer from Baltic suppliers is being seriously engaged, perhaps suggesting that the U.S. Gulf Coast prices had caught up with Baltic or European levels over the past couple cargoes, and this may put the Baltic and European supplies back in the frame.
Light solvent neutrals are estimated priced between $935/t-$955/t, while SN500, SN600 and SN700 are at $975/t-$998/t. Bright stock from the U.S. Gulf Coast or the lower Baltic is indicated at $1,025/t-$1,050/t, while the same grade from Central or Western Europe is priced at $1,060/t-$1,075/t. These prices refer to large parcels of Group I base oils delivered on a CFR or CIF into Apapa port, Nigeria.
Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly email@example.com.