Europe-MidEast-Africa Base Oil Price Report


EMEA sellers who have base oils for prompt and onward sale appear to be floating higher prices to prospective buyers. Buyers are declining, content to wait until September or even longer before replenishing stocks.

But the market is by no means awash with base oils; API Groups I and llI are scarcest. Many of the producers are using the holiday recess to carry out maintenance and repair works to various parts of their refineries, limiting the availability of base oils for prompt spot sales. Maintenance and repairs have been carefully planned to cover contractual requirements, leaving little slack in the system to accommodate new business.

Prices are stable but with hints of small increases. Some say that buyers will eventually have to capitulate and cough up to pay the prices being asked by sellers, but others maintain that buyers will not relent. Buyers say they are looking around for any alternative supply, such as moving to Group ll base stocks, or rerefined material, or in some cases even looking further afield to purchase their requirements of Group l base oils.

Prices for Group l grades, moving slightly upwards due to the shortages, are in the range of $935 to $970 per metric ton for light solvent neutral grades such as SN100 and SN150, with lower vis grades such as SN70 now claiming a premium over these levels. Heavier neutrals such as SN500 and SN600 are priced at $965 to $1,010/t, with bright stock higher at $1,090 to $1,135/t. Prices reported are quoted by sellers where material is available and are based on FOB sales ex mainland European ports.

Prices for material currently being shipped are around $20 to $50/t lower than reported above, because these deals were conducted and completed some time ago, perhaps as long as six weeks previously. Within Europe there is generally now a much longer lead time between contract completion and the loading of the cargo. This is due to limited base oil availabilities for spot sales, and the subsequent forward planning and buying by receivers.

Many enquiries suddenly appeared in the market this week, some for particularly large deliveries of composite grade cargoes, but many of these reflect price checking against contracted or regular supply business. Enquiries were disguised by buyers, altering quantities and grades, requesting pricing information from a variety of selling parties, in an effort to assess whether prices could be renegotiated.

Some enquiries from Turkish sources are so preposterous by way of quantities that they are being treated with the disdain they deserve. Receivers looking for 50,000 tons per month of Group l SN100 or SN150 have all politely been told where to take their enquiries. No doubt these enquiries are being scattered around by entrepreneurs looking to make their fortunes in the road diesel additive business.

Around the region not much has changed. Two lots of Iranian base oils, 5,000 tons each of SN150 and SN650, are both reported as sold at $860/t FOB BIK, for loading first part of September. This market has certainly been greatly affected by current political sanctions, and Iranian producers have had little opportunity to increase their prices.

The South African market has picked up speed, and demand for base oils has been reported as brisk over the past few weeks. Prices, confirmed by traders in this region, have increased somewhat due to the rand vs. dollar exchange rate, and are now $1,100 to $1,140/t for SN150, $1,130 to $1,160/t for SN500 and close to $1,400/t for bright stock. There have been instances of temporary allowances and discounts for some buyers in this region, hence these prices may take on the role of posted levels only.

West Africa has seen a couple of enquiries following the two cargoes reported to be under negotiation last week. Perhaps buyers must replace inventories and find themselves in the unenviable position buying base oils at current FOB levels. New cargoes arriving in Nigeria and Ghana will be priced at slightly higher numbers than before, due to increasing freight costs and FOB levels being marked higher. Cargoes arriving into these locations during second half August and September will be priced in the region of $1,100 to $1,140/t for Group l solvent neutrals and $1,200 to $1,250/t for bright stock, basis delivery CFR.

Russian and Belarus grades still flow through to the loading ports in the Baltic, along with smaller quantities of Uzbek material coming through Ukraine to Black Sea ports such as Reni. The prices for Russian Baltic SAE 10 and SAE 30 are discounted from prices from mainland European producers in the Northwest and Baltic regions. Prices recently quoted for these two grades, which appear not to have changed over the last month or so, are $940 to $965/t, with few availabilities at this particular time.

Mediterranean and North African producers are almost totally out of material for August sales, with a number of turnarounds happening during this time. Tenders have been announced for Syria and for Jordan, and with the Egyptian tender due to be issued within the next month, these requirements would appear to keep the market for Group l grades tighter even than before.

Group ll prices are quietly trying to distance themselves from the Group l numbers being extended at this time. Levels for Group ll and Group ll+ material are around $1,000 to $1,040/t for light vis grades, with heavier N500 between $1,040 and $1,085/t, basis delivered mainland Europe.

Group lll is exceptionally tight in supply terms, and prices reflect this situation. Many users of Group lll material are not able to buy all they require due to supply restraints for various reasons from producers in Korea and Malaysia. Prices in euros for truck deliveries of these grades are put at 960 to 1,010/t for 4 cSt material and slightly higher at 1,000 to 1,035/t for 6 cSt material. Eight cSt grades are still rare in the European market, and it has been difficult to get reports for a pricing range for this particular product.

Fundamentals have remained relatively flat this week compared to last, with crude oil hovering around $80 per barrel for both WTI and Dated Brent, and then both crudes showing slight weakness to fall back to sub $79 levels. However, with crude having advanced some $5 during the week previously, feedstocks have now taken this sentiment on board and are showing strength in depth, even within a relatively weak market in Europe and the U.S. With ICE gas oil futures moving upwards to gain momentum towards the winter months, there could exist a new raft of raw material pressure coming to bear on base oil production.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Contact him directly at

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