Europe-MidEast-Africa Base Oil Price Report


A little more action this week as some players drift back after the summer vacation period, but the EMEA base oil market is still relatively flat on activity throughout the region as whole.

Reports vary on suppliers avails, with some producers saying they would welcome prompt sales to alleviate long inventory, whilst others complain about the lack of material in tank, which is preventing them from making higher offers for supplies during September.

This mixed matrix is sending widely varied signals. Some buyers are being offered prices well above current raw material costs, but equally high for material that has been in tank for a month or more. Some sellers have hiked their numbers for new production to reflect higher current production costs.

With Dated Brent crude retracting from highs just over $113 per barrel, and ICE gas oil showing flat at $984 per metric ton for front month settlement, perhaps the pressure is easing, but these prices are still significantly higher than two months ago. With the typical base oil lag time now kicking in, expectations are that prices will have to increase further to meet new production costs, which will certainly affect base oils coming off the train.

API Group l price ranges have widened, with highs increasing sharply to account for feedstock values, and lower-end prices moving up dramatically. Numbers are based on offers and transactions heard this week, with solvent neutrals at $1035 and $1065/t for the light vis grades, and heavier material such as SN 500/600 at $1045 to $1075/t. With an increase in demand, bright stock has increased to $1095 to $1125/t.

The prices above refer to bulk cargo parcels of base oils sold ex mainstream facilities in mainland Europe and North Africa, where availability of these grades is confirmed.

Local base oil supplies within Europe have not reacted like export cargoes. Some commented they were too highly priced, and the differential between cargoes and truck/ex rack Group I supplies was too great. Taking account of handling, storage and delivery, prices for these supplies are now 60 to 100/t higher than the dollar prices quoted above. There are also comments that the holiday season interrupted local business within Europe, and full service may not resume until September, when prices may start to reflect other market moves.

Baltic and Black Seas
Baltic suppliers of Russian and Belarus product have been loading the last of second half August cargoes which were transacted some weeks ago, with a number of vessels loading for West African destinations, particularly Nigeria. Higher September loading prices are now the norm, with SN 150 and SN 500 predicted at $1010 to $1030/t, but many suppliers are pushing for even higher prices. One cargo of mixed SN 150, SN 500 and SN 900 was reportedly offered at $1055/t, $1060/t and $1090/t, respectively, for mid-September loading. Buyers countered at $20 to $30 lower, but sellers are using the latest impetus in price rises to sustain values.

Black Sea reports are similar, with Russian and Uzbek SN 150 supplies edging upwards to $1055 to $1085/t delivered basis CIF Turkish main ports, and SN 500 being offered around $5 higher. Avails appear to be limited, with some traders being sold out until October after quickly closing first half September business within the last few days.

Middle East
The area remains quiet after the last few days of Eid, but normal business returns this week, with some reports of Iranian barrels being lifted ex BIK. Their destination appears to be the West Coast of India or UAE, but business for these supplies has been severely curtailed due to sanctions against Iran exports. After last weeks offers of $905 to $925/t FOB for SN 150, SN 500 and SN 650, no dramatic changes have been reported, although one Iranian supplier was heard to be looking for FOB levels in excess of $1070/t for SN 500.

With Saudi Arabia getting back to work, no fundamental changes in Group l prices were heard from Yanbu refinery. Levels are expected to run almost parallel with Europe, the Mediterranean and North Africa. Prices for SN 150, SN 500/600, and bright stock are estimated at $1055 to $1070/t, $1075 to $1090/t and $1145 to $1160/t, respectively, on basis of FOB or ex tank loading.

A small tender for Lebanon has been re-issued for SN 150, SN 500 and bright stock due to the timing of the closing date. Many Mediterranean and North African suppliers have been out of station and could not provide offers. Prices are expected to be on a floating basis, and will probably be offered at a premium of $60/t over highs of published rates.

East and South Africa have issued enquiries for Group l supplies and, where competitive, Group ll base oils. Receivers in Sudan after issuing a tender reverted to their incumbent supplier, since discharge restrictions did not support supply from outside the region.

Enquiries for Mombasa and Durban for delivery in flexies have experienced problems, since normal supply routes ex UAE or India have been either too expensive or supplies were short. In this case, receivers have turned to Russian exports from the Baltic, but those prices have increased, almost closing down arbitrage to East African ports. Far East supplies remain an option, since prices remain relatively high with Group l neutrals at $1265 to $1280/t and bright stock at $1420/t.

West Africa awaits the last of the bottom of the market cargoes from the Baltic Sea into Nigeria. About four cargoes will be arriving in the next three weeks, with landed prices at the lowest seen for some time. These cargoes will be within target tariffs of $1000/t for SN 150 and SN 500, with SN 900 at $1035 to $1050/t, all basis CFR Lagos port. New Baltic cargo prices will be $100/t higher for all grades, with mainstream supplies from North West Europe and the Mediterranean $130/t higher. Bright stock will land at $1150 to $1200/t depending on source and parcel size.

Enquiries for Russian Baltic SN 900 are around for deliveries in flexies of 100 containers or more. Prices for material delivered in flexies are based on a premium of $200/t over FOB or ex tank levels, covering the cost of flexibags and the container freight to Nigeria.

Group II/III
Group ll prices have been an enigma within Europe, with importers trying to keep pace with increases and potential Group l increases. Prices edged up slightly this week, with other increments due from Sept. 1. Levels are expected to rise to $1085 to $1100/t for the light vis products, and $1135 to $1155/t for heavier grades such as 500N.

Far East suppliers have been trying to raise September prices in the Middle East, but many of the usual receivers either will not accept the increases or have declined taking imported material for September. Demand from China may pick up over the next few weeks, which will lift Group ll prices and shorten export supplies. If this scenario plays out, Middle East Gulf buyers will face steep increments for October.

September offers of $1070 to $1110/t were heard for light vis 150N, with 500N being offered at $1135 to $1155/t. There were few, if any takers, however. Should Chinese demand resume, these levels may increase by another $50/t.

Group lll prices within mainland Europe remain stable, with no real surge in demand expected before September if at all. The economy of some of the EU states has severely negated the expansion of Group lll in the region. With finished lubricants production down 22 percent from 2011, the need for a high quality base stock has not been in evidence.

Prices are maintained as per last week at least until Sept. 1, when one importer and one local producer have hinted they will look to increase prices. Levels remain at 1150 to 1165/t for 4cSt grades, with 6cSt material being sold ex tank at 1195 to 1210/t, maintaining a differential between Group lll and Group l around $450/t.

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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