EMEA Base Oil Price Report


The EMEA base oil scene has received price increase warnings from a number of producers, in response to the sharp rises in crude and feedstock values following the Iraq insurrection by ISIS.

Some refiners have been quick to move offers for API Group l avails ahead by some $20-$30 per metric ton, whilst others wait to see how the situation will pan out.

Dated Brent crude has moved ahead by some $5 per barrel over last week’s levels, and was quoted around $113.50/bbl in Tuesday late trade, with perhaps further to go on the back of the Iraqi upheaval. ICE gas oil has moved ahead to around $930/t, almost $50/t higher than several days ago.

This pressure on feedstock costs, coupled with low demand within Europe, has created an uncertain market. Group l prices have moved in offer terms, but in deals that have been struck during the past few days, existing levels have been applied to sales which have been closed.

FOB offers are now around $1045-$1070/t for the light neutrals, in demand from some export markets in the Middle East and Far East. Heavy neutrals, popular for destinations such as West Africa, are also showing strength at $1050-$1085/t. Some sellers are asking as much as $50/t higher for bright stock, with levels now touted at $1275-$1320/t.

These prices refer to Group l base oils offered FOB from mainstream producers within the European mainland and North African supply points.

Domestic European base oil prices do not appear to have moved as yet. Some suppliers have indicated that increases will be effective from July 1, despite relatively poor demand, citing the crude and feedstock situation, which will increase operating and production costs for refiners across Europe. With increases in the pipeline however, and the possibility that prices could be much higher come September, some buyers are opting to fill storage tanks now rather than wait.

Levels for local sales are around 80-110/t higher than export offers this week.

Group II base oil sales do not appear to have been affected as yet by events, but distributors have mentioned that source increases will certainly be in the pipeline given higher feedstock costs. Some sellers have increased prices by $15-$20/t, stating that they do not want to be in a situation where, should crude continue to rise, they may have to announce increases of $50-$100/t. Sellers would rather apply small increases more frequently, rather than expose themselves to large corrective measures.

Group II price levels for light vis grades are slightly higher at $1090-$1135/t, and the heavy grades 500N and 600N are $1195-$1290/t, all basis ex tank Northwest Europe. The pricing pressure appears to be on the lighter grades, rather than the heavy range of Group II products.

Group III suppliers, both European producers and importers alike, have been trying to move prices 10-15/t higher this week, with options to move prices again from July 1. Levels are revised upwards to 965-975/t for light 4 cSt grades, with 6 cSt material coming out of tank at 975-980/t.

Baltic & Black Seas

Sellers in the Baltic have revised some prices on advice from Russian and Belarus refineries that FCA levels for base oils will start to rise imminently, with Urals crude following DB upwards by some $6/bbl. Sellers have moved offered levels upwards by some $20/t, adding that prices for replacement stocks will be another $25/t higher. Offers for SN 150 and SN 500 have moved north of the $1000/t level, with prices for SN 150 at $1000-$1025/t, and SN 500 at $1010-$1030/t.

SN 900 selling levels are not clear, although one supplier reported buying this grade at $1085/t DAF border. With the quality of this material assessed at the upper end, lower prices may be in the market for inferior material still termed SN 900.

Buyers are keen to close cargoes from the Baltic for West Africa, Middle East and even Far East.

Black Sea trade has been booming into Turkey, with sales of Uzbek base oils from Fergana refinery taking over from traditional Russian supplies from Crimean ports. Also being tapped is supply of SN 180 and SN 350 from Turkmenistan, taking the place of both Russian and Iranian imports which were supplied through Iraq and Kurdistan, regions where trade is becoming more and more difficult.

Prices for the grades from Fergana have moved upwards and are now around $1000-$1010/t basis CIF Gebze in bulk. Deliveries in flexies are offered around $25/t higher. Reports of Uzbek grades sold in flexies at $990/t basis CIF Gemlik have been dismissed as fiction.

Middle East

With tension growing due to the Iraqi situation, some buyers have been concerned that supplies of base oils could be interrupted and are keen to carry higher stock levels. This mini surge in demand has increased pressure on local suppliers of Group l base oils.

Prices are on the rise, with Group l imports arriving with tags of $1085-$1095 for the range of solvent neutrals. Lower quality Iranian material is moving upwards to $1045-$1055/t for re-exported material from UAE. Some local buyers are looking to the Black Sea for a large cargo of Russian SN 500, to be brought into the Middle East Gulf or the west coast of India, but this movement has not been firmed up yet due to supply problems at the loadport in Crimea.

There is a possibility that Group l grades could go short in the Middle East Gulf. Some blenders are looking at switching to Group II where this is possible. Limitations on which finished lubes can be produced using these grades has buyers are continually looking for Group l options, particularly for bright stock.

Far East Group II producers supplying the Middle East Gulf are advising of price rises of around $20/t for material arriving in early July. More than one buyer has expressed concerns that sellers are looking to increase CIF prices by $45/t for second half July barrels, bringing prices into line with Far East markets. These increases apply predominantly to lighter vis grades, which may be a blessing since the heaver grades which are utilised more in the Middle East.

Levels heard in the market for offers of Group II are $1090-$1125/t for the light vis grades, 60N through to 220N, with 500N/600N around $1120-$1145/t CIF/CFR Middle East Gulf ports.


Re-exports of Iranian SN 500 from UAE to East African and South African buyers have also risen in price this week. Offers for a number of containers of flexies are quoted at $1208/t basis CIF Durban and Mombasa, an increase of around $25/t.

West African receivers have negotiated a number of cargo shipments with European traders originating from Baltic, Northwest Europe and Mediterranean supply points. Ghanaian tender supplies of some 5,000 tons of mixed Group l grades are being supplied ex Sicily, with traders topping off with further cargo which can be sold into Nigeria. This saves on freight costs and allows mainstream products to be supplied at competitive rates into this market.

Two known cargoes are to be loaded in the Baltic with a total of some 22,000 t of base oils on board. These parcels will load SN 150, SN 500 and in one case a large quantity of SN 900 for delivery into Apapa. Prices assessed on the basis of FOB, plus freight, plus margin, come out around $1065-$1085/t for the range of neutrals SN 150 to SN 500, and higher quality SN 900 at $1195/t.

Bright stock from producers in Europe is estimated to be offered in West Africa as high as $1375/t CFR, with very short validities on prices.

Prices are moving upwards in West Africa, both on index-linked business and on spot sales where sellers are incurring both higher FOB numbers and increases to freight rates due to higher fuel costs.

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.

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