Those still in attendance have said that the market is marking time, waiting for September to evaluate what will happen to prices. Some suppliers within mainland Europe have said API Group I prices may have reached a zenith, and only sharp increases of crude and feedstock prices will promote higher prices than those being seen currently. These commentators are of the opinion that the supply-demand imbalance, with shortages of material, has played out as far as it can go, and that buyers are readjusting their inventories to accommodate material being produced and are also looking further afield for alternative supplies.
Ultimately this could provide the ammunition for buyers to demand that prices be adjusted downwards, as has been the case in regions such as China and the United States.
European Group I prices are established at similar or slightly lower levels than last week, in the range of $935 to $970 per metric ton for light neutrals, $955 to $985/t for heavy neutrals, and $1,085 to $1,150/t for bright stock.
In the case of Group II base oils, source producers are looking to reestablish the pricing delta between these grades and Group I production by applying increases wherever and whenever the importers can make it work. Sellers are trying to hoist Group II prices to at least $50/t above Group I levels, although in most cases this quantum leap will have to be made in stages rather than in one price hike. Prices at the moment are between $985 and $1,025/t for the lighter grades, with the heavier vis material in the range of $1,020 to $1,080/t, basis ex tank supply northwest and Mediterranean Europe storage.
Progressing along the continuum, Group III base oil prices are again being tweaked upwards. Prices are now at their highest levels since this type of base oil was introduced into the European arena, with numbers reported this week for 4 cSt and 6 cCt oils between $1,350 and $1,425/t, based on euro equivalent ex tank sales.
Regionally, Russian grades are being offered for sale ex Baltic at the same price levels as previously reported. SAE 10 and SAE 30 are offered at $920 to $945/t basis FOB Liepaja port. Quantities of I-12, I-20 and I-50 grades have been offered, but with the slightly lower quality and limitations for use of the 12 and 20 material, the prices offered were declined as being too high. Some traders may elect to buy these grades for importation into areas such as West Africa, where the I-50 material can be substituted for bright stock, in some nonapproved applications.
Iranian material continues its weakening trend, and further price drops of some $10/t have been reported for cargoes of SN 150 and SN 650 ex BIK. Prices of $845 and $850/t respectively have been seen. There are still a number of enquiries for these grades, but mainly on the basis of re-export from UAE. Buyers in Southeast Asia are using this material as a stop gap, due to the keen pricing and the flexibility of being able to buy in relatively small quantities in flexibags. Prices for this material delivered into these markets are comparable to the local Group I pricing for larger cargo sizes, or ex tank numbers within the region.
West Africa appeared to have gone quiet, when unconfirmed reports were received of two new cargoes being negotiated for import into Nigeria, with further quantities of material being reported for Ghana and Cote dIvoire. The Nigerian cargoes appear to be one traditional three-grade lot, including SN 150, SN 500, and a larger quantity of bright stock, whilst the other shipment may be based on a Baltic mixed cargo, with additional quantities of mainstream material being loaded ex one or two Northwest Europe mainland ports.
Prices for mainstream material entering West Africa have remained flat over the last few weeks, between $1,075 and $1,125/t for neutrals, and $1,135 to $1,240/t for bright stock, all basis CFR. Prices for Baltic-type material could be up to $60 to $80/t less than quoted above.
Crude oil and feedstock prices are once again showing strength. Whilst crude was languishing in the mid $70s per barrel, base oil prices rose dramatically by some 30 percent over the last few months. Now crude has moved through the notional $80 per bbl level, with WTI at around $82, and Dated Brent showing at $82.50 per bbl. ICE gas oil is positive through the front month and beyond, and with vacuum gas oil prices making large gains in early week trading, the emphasis should logically be on base oil prices continuing to rise. This does not appear to be the case.
Major players have announced decreases in postings for some grades, both in the Far East and in the United States. With the EMEA market not subject to posted pricing, it is possible that EMEA may maintain pricing for all types of base oil on a price positive footing.