Coupled with this, many buyers are now trying to replenish inventories which were last topped up before or just after year end. Seeing the market moving swiftly upwards, many buyers are trying to secure product. At this time the level of enquiries in the market vastly exceeds the amount of base oils available, and buyers are searching both local and distant markets for availabilities.

Dated Brent crude touched $126 per barrel in early week trading but has retrenched to around $124/bbl. ICE gas oil front month reached a new recent high at $1043 per metric ton this week. There appears to be no letting up to the pressure applied to all petroleum products, including feedstocks and base oils.

Group I prices in mainland Europe have leapt by more than $100/t in some cases, with further price movements on a daily basis. Group l solvent neutrals there are $1155 to $1220/t for the light grades, with heavier material such as SN 500 offered at $1180 to $1225/t. Bright stock avails have shrunk within the last week, and this material is now offered at $1295 to $1350/t. Prices are offered with limited validity, and a number of buyers are willing to bid higher to access supplies. (These prices pertain to bulk supplies of cargo-sized parcels, from European mainland or North African supply points.)

Many offers are for material which will only be available in April or even May, and many deals are struck on an index-linked basis. Few sellers are willing to contemplate fixed prices far in advance of loading dates. Some mainland European suppliers are favouring domestic over export business. With the rising demand for localised supply, there are few shortages of takers for any available material which can be sold at a premium of some $30 to $50/t over larger cargo-sized export parcels.

Baltic and Black Sea
Baltic prices led the recent upsurge in the market, due to base oils going tight in exports sales from Russia, Belarus and other CIS locations. This is causing shortages in the supply chain and driving prices to new highs. Group I SN 150 and SN 500 are $1175 to $1200/t, with unsubstantiated reports of levels breaching $1200/t. Heavier neutrals such as SN 900 are in very short supply, with no reported offers although there are stocks in tank.

Many Baltic sellers are waiting to see where the market is going before offering parcels for prompt loading. Distributors have had problems getting their usual allocations, a situation that is exacerbated by three production units currently undergoing turnarounds.

Black Sea markets are facing similar shortages or more, since Turkish buyers have flooded the market with enquiries looking for Russian, European and Middle Eastern base stocks, with reports that some buyers are looking further afield to Venezuela and Far East.

Prices in the Black Sea are moving fast, particularly for any Russian supplies. Two offers were heard at $1245 and $1260/t for SN 150 and SN 500 on a CIF delivered basis into Gebze port. These offers were accepted almost immediately, subject to terms and conditions.

Middle East
Middle East Gulf base oil barrels have soared in value over the last few days, with Iranian SN 500 offered out of storage in UAE around $1135/t, but it was not confirmed whether this deal was accepted by FOB buyers. Other Iranian export material is scarce with few offers for SN 150, SN 650 and SN 500 coming out of Iran. Prices were gauged to be $55 to $75/t higher than last reported, but are very much subject to confirmation.

Saudi Arabian supplies have moved higher with very few spot avails of base oils coming out of this region. Traditionally a large part of this market is contracted, long term business, and whilst official prices are possibly set to move only from April 1, indications are that selling levels are in line with European Med levels plus a few dollars. Levels are $1175 to $1240/t for the Group l solvent neutrals, with bright stock sold around $1360/t. All prices refer to bulk parcels on either FCA or FOB basis.

Africa
South African prices have risen in line with other markets. Supplies of Group l locally produced base oils are short, and an allocation system could be put into place. Prices for Group l solvent neutrals in these regions are $1240 to $1300/t, with bright stock in small parcels around $1425/t.

West African buyers have sent out enquiries to almost all parts of the globe looking for Group l, and in some cases Group II base oils. At the same time the annual Ghana tender has been circulated, with incumbent suppliers a good bet to retain this business, given the current state of the export market from Europe.

Prices are being offered into Nigeria on a daily basis. Estimates are that cargoes being agreed at the moment will be landed at $1285 to $1350/t for Group l neutrals, and bright stock around $1450 to $1500/t.

Group II/III
Group II prices throughout the EMEA regions have risen both as a result to differentials between Group l and Group II levels, but also due to producer increases in Far East and the U.S. Levels have increased to $1225 to $1280/t for lighter vis material, with heavier material at $1310 to $1365/t, all on basis of ex tank supplies ex Northwest Europe or Mediterranean storage.

Officially Group III product prices have not moved as yet. However, reports are that substantial increments have been applied, and will be applied in the next few days, with few suppliers waiting until April 1 before raising prices. Suggestions are that Group III grades could rise as much as 65 to 75/t for all viscosities, which would effectively maintain the differential between these grades and Group l price levels. At the moment levels are increasing by some 10 to 25/t, taking prices to 1360 to 1385/t for 4 cSt grades, with 6 cSt at 1390 to 1425/t, but with the certainty of further upward moves to come.

Price ranges have been exceptionally difficult to measure this week to due to the speed at which the market is moving. However, the EMEA base oil market is moving decidedly upwards, and will continue to do so until production costs have been more than covered, and base oils have been restored to positive netbacks and acceptable realisations.

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