Europe-MidEast-Africa Base Oil Price Report


As activity returns to EMEA, base oil prices remain relatively stable. The buying community appears to have accepted one or two regional price increases, perhaps reflecting the realization that the market has bottomed out and that the next pricing movements may be upwards.

Certainly the lowest priced materials, possibly recent Russian and Iranian exports, have not eroded any further, and attempts to move prices off the bottom of the market are starting to take effect.

Background economics are reinforcing this new train of events, with crude oil stable at $111 per barrel in respect to Dated Brent. This level has not changed since last week, with minimal variations during the last seven days. ICE gas oil has also remained in the same ballpark, trading at $952 per metric ton, against $949/t last week.

Although fundamentals are steady, base oil values remain out of step, according to many refiners and producers in Europe. Current commentary from sellers and buyers relates to base oil prices now moving upwards, eventually once again playing a contributory part to the crude slate.

Mainstream European Group l prices remain the same as last week amid attempts by some sellers to hoist levels by $50-$60/t. These incremental attempts have been ridiculed by buyers, since the European market does not move as one, and does not share the benefits of posted prices. Hence some sellers have been prepared to offer material at existing levels, diluting the effects of any producer trying to hoist selling numbers.

Group l light solvent neutrals are still $880-$905/t, with the heavier SN 500/600 grades $900-$935/t. Bright stock in cargo parcels is still reckoned between $985-$1020/t ex European mainland. As mentioned, some offers have been received at $50-$60/t higher than the top of these bands but with no reported take.

Comments received from some producers and suppliers were dismissive of large increments being applied, stating that the way to move forwards would be to apply small gradual price movements which could be absorbed and accepted as reasonable, given the background of other petroleum product prices and the higher raw material costs which have applied to base oil production for some time.

Prices above refer to FOB offers and sales, ex mainland suppliers in Europe and North Africa where availability of material exists.

Similarly attempts by some local sellers to increase prices have met with stiff resistance from many blenders and other buyers who have almost unlimited alternatives. With local European demand still in the doldrums, and some Eastern European sellers prepared to discount merely to move products, it is becoming increasingly difficult to re-establish a local or domestic market at a premium to export type sales.

Should impetus be found behind an export drive to Group l markets such as the Middle East, India and South America, there is a chance that local European mainland prices could dip below cargo numbers, given the raft of smaller traders and distributors in domestic markets.

Baltic and Black Seas
Baltic supplies of Russian and Belarus base oils are being priced up. Levels for SN 150 and SN 500 have been sold at $880-$895/t, with current offers as high as $920/t all basis FOB. SN 900 is being offered at $920-$930/t, but with one offer at $950/t for this grade. Baltic sellers have been forced into selling at these levels, since FCA levels within Russia have moved higher. The overall costs to bring these grades to FOB status have mounted over the past month, and have resulted in minimum selling price levels.

Turkish buyers in the Black Sea have returned to the base oil market, making many enquiries for Russian grades to be delivered into storage in ports such as Gebze, Aliaga, Izmir and Derince. With most area traders and distributors having been unwilling to discount prices to compete with recent imports of Iranian material from the Middle East, they are now able to establish new selling levels. Offers have been heard at $925-$945/t, for the two main grades to be delivered CIF to northern Turkish ports.

Strangely, availabilities are limited, perhaps due to low seller inventories over the last month accompanied by declining sales volumes. With current avails tight, suppliers were quick to point out that this could help prices to escalate to more acceptable levels. Another enquiry for a small supply of SN 900 ex Baltic in flexies has been indicated at $1025/t for immediate acceptance.

Middle East
Near Middle East base oil markets are almost non-existent due to the continuing turmoil in Syria and surrounding areas. All base oil imports to this region have been halted for some time, and in discussion with local blenders and suppliers it appears to have become the norm for finished lubricants to be shipped into these regions from Turkey, Jordan, Iran and sometimes Iraq.

The Egyptian General Petroleum Corp.s tender has been shrouded in mystery once again, but confirmation has been received that the supply has been divided between a major Mediterranean supply and an incumbent trader. The reports are basis fixed price of $975/t CIF Alexandria from the major for the first cargo, and the remainder, with options on an index-linked basis from the trader, at a premium of $35/t over a published FOB high, basis CIF Alexandria. Payment terms are still not clear, with latest supplies being made on an unsecured open credit basis.

Other areas such as the Middle East Gulf and Saudi Arabia continue to develop as producers and consumers of Group l and ll grades, and as major Group lll base stock exporters from Bahrain and Qatar. Middle East Gulf business has been brisk with declining supplies of Iranian Group l grades, but increasing quantities of Group ll material being imported from the Far East. Prices for these grades are competitive against locally produced Group l and any European imports which could be considered.

Prices for Group l Iranian exports have lifted off the lower levels seen over the past month or so, and the relatively small quantities of exports coming out of BIK and Bander Bushire are mainly going into UAE for re-export, being purchased in local currencies without major bank intervention. Prices are still attractive to buyers and are now established at equivalent U.S. dollar prices of $840-$875/t for SN 500 and SN 150, with smaller quantities of lower spec SN 650 at $820/t equivalent. These prices refer to FOB levels

There are rumours within this region of Iranian SN 500 being sold at very low levels into UAE, at around $770/t delivered. These sales could not be corroborated by either sellers or buyers.

East African receivers have been taking Russian exports in flexies from Baltic supply points, and there appears to be growing enquiries for this material from Dar-es-Salaam, Mombasa and Beira.

Sudanese buyers tender has been closed but no result has been announced as yet. It is considered that the incumbent suppliers will retain this business due to the restrictions which apply to delivery of material into these receivers.

South African base oil trade has been lively on the flexi front, with parcels being delivered CIF Durban from UAE and Baltic sources. Another enquiry for around 30 TEU per month has been received by suppliers for SN 150 and SN 500 for deliveries commencing during March.

Prices are offered at $1085-$1100/t for the two main grades, but with upward pressure starting to build, these levels will probably be revised over the next few weeks.

West African receivers are buying for areas such as Nigeria, Ghana, and Cameroon. Sources in the Baltic, Black Sea, mainland Europe, the United States and South America are considered supply points, with negotiations on-going for a wide range of grades and products.

Prices are being targeted by importers to Nigeria at levels which will be nigh impossible to meet, with receivers looking for pre year end FOB numbers, coupled with lower freight costs. The subsequent landed prices are expected to be $940-$980/t for Group l solvent neutrals, $990/t for SN 900, and bright stock where applicable at around $1070/t, all basis CFR.

Realistic price FOB levels and freight costs will push these numbers upwards by $40-$70/t for cargoes agreed now, but perhaps with further upward movements to come in the following weeks.

Group II/III
Group ll European prices are $1050-$1075/t for lighter viscosity grades, with heavier material between $1085-$1145/t. Prices are based on truck or barge supplies ex rack or ex tank Northwest Europe or the Mediterranean.

Middle East Gulf Group ll prices are between $1000-$1055/t for light grades from 60N through 220N, with heavier vis material, 500N and 600N at $1055-$1090/t. Price levels are based on delivered cargo quantities CFR/CIF southern MEG ports.

Europes Group lll base oil market is full of comments regarding the state of this particular market. Some importers have said that they expect the market to come into balance during the next few months, whilst other local European producers are of a different mind, stating that the supply situation will continue to remain long for the foreseeable future or until demand for finished lubricants is reinstated to pre-2008 levels.

Prices remain subdued for both 4cSt and 6 cSt products at 955-1010/t, basis ex tank supplies. There appear to be many variations on prices for these grades, but when net levels are established, after TVAs, spot offers, and volume and term discounts, the prices gravitate back to those indicated above.

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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