Europe-Mideast-Africa Base Oil Price Report


The EMEA base oil market appears to be in some form of turmoil, with sporadic pricing movements depending on product, grade and location. A really messy picture is evolving with some suppliers running for cover, whilst others are willing to join the fray and are suggesting some lower numbers for supplies.

Some sellers have indicated that they are prepared to talk of lower prices for certain grades such as SN 150, but only those located in northwest Europe appear to be going along with this sentiment. What appears to be happening is that certain price pressures are being exerted from Baltic supplies, where Russian prices have fallen from their highs but have now stabilized. The original downward movement, however, has caused a knock-on effect for producers in northwest Europe who are looking to maintain market share and keep their receivers sweet, all within a market which, even more peculiarly, is low on demand but at the same time even lower on supply.

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This confusing picture is further clouded by refiners in the Mediterranean and Atlantic regions who are saying that their prices will remain as they have been over the last few weeks, and they see no reason to enter discussions regarding decreasing or discounting these levels.

Some suppliers have been targeted by traders and other receivers as potential discounters, whilst others have been declared off-limits and are not being approached for business at this time, since it is known that these players will not entertain talks on lowering prices. These two groups of sellers are subsequently seeing the market from totally different angles. One group sees a buoyant market so long as they talk lower prices, whilst another, with fewer approaches from buyers, is starting to become concerned about stocks building up. The end result could be that those with higher prices will be forced to discount to move stock, thus creating the momentum for a falling market.

This dysfunction is even more confusing where different grades and cargo composition are concerned. Those sellers with bright stock to accompany other grades, such as heavy solvent neutrals SN 500 and 600, are saying that they have no need to discount and that they will offer prices and stipulations commensurate with demand for these cargoes. If a buyer wishes to purchase a stand-alone quantity of SN 150, then the price can be negotiated, but if the same buyer and seller are negotiating parcels of mixed grades say for export to West Africa, then the price will remain at a higher level.

From a pricing viewpoint, ranges have now been stretched so far as to make reporting them almost risible; however, these are the lows and highs for the market as it stands today.

Group I solvent neutrals with the European mainland are reported within a wide band between $1,325 and $1,420 per metric ton for light neutrals SN 100 and SN 150. Lighter grades such as SN 70 and SN 90 remain at the upper ends of the range, and heavier neutrals such as SN 500 and SN 600 are showing between $1,355 and $1,455/t.

Bright stock in large quantities is still holding firm at between $1,565 and $1,650/t, whilst premia are still being added to this grade and supplies are limited.

These prices refer to bulk quantities of base oils purchased on an FOB basis from supplies within mainland Europe and North Africa.

Within the same region, supplies of Group II grades appear to be sold on a monthly pricing cycle, with September levels much the same as during August. Buyers of these grades have not announced any major moves to price levels, and the ranges remain between $1,485 and $1,555/t, with higher vis material coming in at around $1,535 and $1,730/t. With little price movement from the producers of these grades at sources in the Far East and U.S., it would appear that some form of stability is entertained for these products at this time.

Similarly, Group III grades within Europe from both local production and imported material remain in the same ranges as the last week of August. Some sellers of these grades talk incessantly about increasing prices, but these talks do not seem to manifest themselves into actual price hikes. Thus, Group III levels remain between 1,380 and 1,450/t for the lighter 4 centiStoke grades, and 1,390 to 1,475/t for the 6 cSt grades.

Russian Baltic supplies of Group I material have caused some problems within the northwest European market as denoted above, but in themselves prices for these supplies have not moved significantly downwards since last week. There are many tales and stories being recounted by buyers and potential buyers of very low prices on offer in this market, but on closer examination these appear to be exaggerations. Prices were heard offered at around $1,165/t for quantities of SN 150, but this was reported as inaccurate by the seller.

Prices are still in the ranges of between $1,245 and $1,290/t for the FOB supplies of SN 150 and SN 500, with the really heavy solvent neutral grade SN 900 being offered at about $1,370/t. Reports of buyers attaining price levels below $1,200/t for the lower neutrals have not been borne out by Baltic traders and are refuted, even by some buyers.

In the Black Sea, the end of Ramadan in Turkey has been marked by the Eid celebrations, leading to very little business being transacted this week. However Russian traders did say they had received many enquiries from Turkish and other Near Middle East players, and were prepared for a large amount of business during the remainder of September.

Prices appear to be slightly weaker than the north, with CIF numbers indicated at anything between $1,325 going down to $1,225/t for cargoes of SN 150 and SN 500 between 2,000 to 5,000 tons, freight playing an important part of the delivered prices.

Middle East Gulf areas have experienced the same phenomenon as Turkey with the religious festival of Eid extinguishing any chance of the base oil market showing signs of life. However, it is anticipated that life will return to normal this week.

Prices in the region for Iranian material have not moved significantly over the last few weeks, with few trades actually being filled. Levels are still low in comparison to any European or Far East alternatives and this seems to have kept the trade into India and East Africa alive during the last few weeks. Prices FOB for relatively small lots of between $1,500 and $2,500/t are priced at $1,200 to $1,225/t basis FOB United Arab Emirates or Bandar Imam Kohmeini, where the trade can be affected directly.

Saudi Arabian producers have not restarted after Eid, hence prices for this region are unchanged.

West Africa has seen the first arrivals of the Russian Baltic cargoes, with one vessel arriving into Apapa earlier this week. One trader stated that the freight cost from the Baltic was much higher than anticipated and as a result CFR numbers are estimated now to be around $1,475 to $1,520/t for parcels of SN 150 and SN 500, and around $1,575 for SN 900.

Additionally, prime European production grades will be levied some $120 to $150/t higher in this region due to the expensive vessel approvals required and much higher FOB levels for the actual products.

Behind the scenes, crude levels have dipped again this week, although Dated Brent is still trading within the narrow range of $108 to $116 per barrel at around $111.25.

International Commodity Exchange gas oil front month appears stable to weak with levels down some $50 from last week at $934 in early week trading. Products such as low-sulfur vacuum gas oil are showing around $812/t, with high-sulfur VGO below $800/t. These weaknesses will appeal to the buying fraternity, who will use these negative moves to highlight why base oil prices should come down from the current levels.

Even with some downward movement showing in mainstream European trading, buyers are unhappy with the time it is taking and the amounts by which base oil prices hypothetically may drop. Buyers want to see significant falls to base oil prices, perhaps by some $150 to $200/t, sources comment. Whether these levels will be achieved remains to be seen, but with the market in some form of disarray, perhaps this is the time to press home any buyers advantage to try to meet their goal.

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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