Europe-Mideast-Africa Base Oil Price Report


August 1 came and went without base oil price announcements. Baltic prices, which slid downward by some $25 to $40 per ton from their highs, are steady now. Most of the EMEA region is quiet.

Traders have been trying to push Baltic prices back towards where they came from. Needless to say, this has been unsuccessful to date.

One large cargo was confirmed moving out of the Baltic to West Africa for Nigerian traders/importers. This is an interesting development, showing that some of the more adventurous importers and receivers in Nigeria appear to be trying their hand at dealing directly with Baltic sellers, or perhaps it is the other way around. Perhaps sellers have identified importers and are assisting with chartering, loading and doing business directly without the aid of the third party traders who traditionally hold the reins to this market.

Prices for mainstream European production remain unaltered with few pieces of business transacted. API Group I solvent neutrals are still $1410 to $1430/t for light and $1420 to $1455/t for heavier products such as SN 500/600.

Bright stock seems to have dropped from the extreme highs, where premiums of more than $100/t were added to published levels, disguising the true selling levels for this grade. It is still attracting a premium, but in the region of $40 to $60/t. This gives a range for all sizes of bright stock purchases of $1580 to $1635/t. All quoted prices are based on FOB sales ex mainland European and North African ports.

Russian sales ex Baltic ports have been thin, with only the one confirmed cargo. Traders are trying to move all material possible to some newer destinations such as the U.S. Gulf Coast, Mexico, and South America. However, no buyers appear ready to commit since the arbitrage is not in place to allow these movements with the FOB levels and freight showing as it is today. SN 150 and SN 500 loading from one of the four main Baltic ports are offered in a range of $1315 to $1325/t, but whether cargoes will be completed at these levels is not yet known. Buyers are countering below $1300/t, so interesting negotiations lie ahead. Some traders have offered prices of $1255-$1270/t, which are unacceptable to Baltic sellers.

Equally, Russian cargoes in the Black Sea have taken a tumble and aroused the interest of Turkish buyers. Instead of reasonable counters, some buyers have been heard asking for delivered levels close to $1245/t, basis CIF Gebze, which would not cover the FOB value of the material. Perhaps the interest to buy cargoes of SN 150 is not for blending purposes, but as a fuel diluting agent. This malpractice continues until government agencies clamp down on the imports, and then within months starts again through some other circuitous route.

The Middle East Gulf is exceptionally quiet. No doubt there will be some small cargo movements locally, but no large exports out of Iran have come to light this week. After one loading of 5,000 tons of SN 500 ten days ago, at about $1285/t FOB BIK, no other transactions are reported. Small quantities of very light solvent neutral will arrive into UAE from Pakistan, but European material is still up against the arbitrage to be able to move into this area, as can seen from the Iranian selling price for the SN 500.

Saudi Arabian prices also stay as they were this week against little new business.

East African buyers bought quantities of Korean Group ll material, augmenting Group l arrivals from Red Sea and UAE during the last week or so. This import may be a one-off; there will be interest to see if this is followed up with additional supplies in the near future. Perhaps it was purchased for a specific formulation under licence by one of the large third party outfits in this region. Prices were undisclosed but assessed to be $1480 to $1490/t for the150N and $1565 to $1580 for 500N.

West Africa is coming out of the rainy season, and some activity has been noticed, but many buyers are travelling during this holiday period. Prices for Baltic material arriving into Apapa, Nigeria, are assessed at $1455 to $1485/t basis CFR if third party traders are involved. But if importers are removing trading margins from these transactions, then prices as low as $1420 to $1455/t could be achieved without the middle man involvement.

Mainstream cargoes from Europe are unlikely to follow this route, since major suppliers require accreditation and procedures to which many Nigerian importers cannot conform. Thus it remains to third-party traders to deliver cargoes of prime material, including bright stock which is not available from Russian suppliers. Prices for these cargoes are estimated at $1560 to $1585/t for Group l solvent neutrals and $1700 to $1725/t for bright stock in quantity.

Group II prices within mainland Europe have moved slightly higher from the start of August, but the scene is confusing since there are temporary discounts and temporary voluntary allowances for certain buyers. It is impossible to state if there has been an official price increase from the U.S importers. Korean importers do not appear to have changed price levels.

Group III prices appear to have remained the same, although in two quoted cases, have fallen by some 5 and 10/t. This may be a consequence of exchange rate movements between the dollar and euro. Prices are still at 1360 to 1410/t for the lighter 4 cSt material, and 1390 to 1425/t for 6 cSt grades, basis ex tank Northwest Europe and Mediterranean satellite storage.

Background statistics remain largely unaltered, with Dated Brent trading at $116.90 per barrel, marginally off last weeks levels. Reflecting that slight movement, ICE gas oil front month is showing at $971/t in early trading this week. This is off some $9 from last weeks levels, with vacuum gas oil mirroring this movement. These fundamentals do not put any pressure on producers of base oils to make any sudden movements, as would be expected during August when almost all appear to be on vacation.

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

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other