EMEA Base Oil Price Report


EMEA base oil markets are slowing down for the summer with players from European companies on vacation and the Middle East on a mass exodus from temperatures of up to around 113 degrees Fahrenheit (44/45 degrees Celsius).

API Group I prices have started to weaken throughout Europe, where more than adequate supply has taken over from a short market four or five weeks ago. With only bright stock holding firm this week, sellers are bracing for around two months of light trading, with prices perhaps coming under pressure.

Crude levels have retreated to around $108.50 per barrel in respect of Dated Brent, halting any further increases in feedstock costs. ICE gas oil futures have fallen below the $900 per metric ton mark this week, with front month settlements at $888/t in Tuesday p.m. trading.

Group I prices are trimmed accordingly, particularly at the top ends, with light solvent neutral grades available in offers at $1025-$1035/t, with heavier neutrals SN 500 and SN 600 between $1035/t and $1055/t. Bright stock is the steady rock due to ongoing demand, with prices maintained at $1230-$1265/t.

Prices above refer to bulk cargoes of mainstream base oils being offered or sold ex mainland European and North African supply points, dependent on grade availability.

Europes local markets have shown little change, with many large and small blenders starting the run-down for summer. Many have noted that the perception is for prices to move downward between now and September. Some buyers even state that they expect prices to come down further in late August and early September, and therefore are in a position to postpone any replenishment of inventories until then.

The price differential between local sales and exports has increased – due to the trimming of export offers this week and the continuance of local and domestic levels, which do not react to change as quickly as international trades – to 110-130/t.

Prices heard for Group II grades appear to have not moved significantly. Generally these grades are not offered on a spot basis, and most buyers will have monthly or quantity terms negotiated in advance, with the result that these levels may not be as responsive as Group I export prices. The Group II market in Europe is more closely linked to domestic pricing than to export levels. Prices are therefore maintained at $1095-$1150/t in respect of the light grades, coupled with the heavier 500N and 600N at $1215-$1325/t, basis ex tank Antwerp-Rotterdam-Amsterdam-Germany.

Group III prices within Europe appear to be set, with few variations over the last few months. There have been small movements upward and downward but there seems to be a gravitational element to these prices which bring them back to the same point time and time again. Last week, buyers said that, within reason, they had supply options for these grades and could switch if required. Suppliers responded, saying that in most cases buyers do not move around, but appear to be satisfied with the quality and pricing offered from incumbent suppliers.

Prices are therefore unchanged, with 4 cSt grades being sold ex tank at 965-975/t, with 6 cSt material at 975-980/t. No price increases have been notified w.e.f. July 1.

Baltic and Black Seas

Baltic prices are nearly always under pressure from traders’ counters, which in some cases can be exceptionally aggressive. One instance this week, for example, had traders bidding some $55/t under the market to try to move prices down. Sellers ignored these bids and are still insistent that $990-$1000/t can be achieved for SN 150 and SN 500. Some sales would be closed around $10/t beneath the low of this range, but sellers have not officially agreed on these levels. SN 900 has been bought by distributors at $1064 DAF border, and with ancillary costs to bring this quantity to FOB status, a price of close to $1100/t is anticipated. Other SN 900 material has been rumored at $1023/t, but either this is misquoted, or the quality is substantially lower.

This week sees Black Sea trade picking up again following the Ukrainian situation with Russia, and a small cargo of 2,000 tons, thought either to be SN 500 or a Russian type of bright stock, is loading ex Theodosia for discharge in Singapore. This unusual movement may be using space on parcel vessel, but theres no confirmation of this. Uzbek grades ex Fergana refinery are the mainstay of Black Sea trade at the moment with a number of grades of varying viscosity being offered mainly to Turkish buyers who are back in the market with a large number of enquiries.

Prices have not moved much. Buyers are suggesting that levels have fallen some $20-$30/t, but sellers are adamant that delivered prices for SN 150, for example, are still around $985/t CIF Gebze. Other heavier vis grades are added to the avails out of this source and are priced from this base according to viscosity.

Middle East

Near Middle East is still embroiled in the Syrian civil war, with the Iraqi problems to the east contributing to a cessation for normal trading of base oils within that region. There are sporadic reports of various small parcels of base oils crossing borders which would have been unimaginable some time back, but getting to grips with pricing and avails within this region is impossible.

Middle East Group I prices appear to have firmed a little on the back of a shortage of Iranian barrels coming to the market in the south. Traders and producers claim that they can make better margins selling their base oil production into areas such as Iraq and Kurdistan. No numbers have been put forward for this trade as yet, but prices for SN 500 being offered on an FOB basis ex BIK has moved up by $20-$25/t this week. Buyers are still there to take quantities of this oil, but sources in United Arab Emirates claim that they are unable to meet expectation sales into west coast of India due to constraints on avails.

Prices have moved up to around an equivalent of $1050-$1060/t basis FOB, with re-exported levels ex U.A.E. another $10-$20/t higher.

Locally produced U.A.E. prices for Group I solvent neutrals remain at $1095-$1130/t. Bright stock coming into the region is being landed at $1275-$1290/t depending on source and parcel size.

Demand is diminishing within the Middle East Gulf regions, with many buyers leaving the region for the summer period. There are a number of import enquiries for delivery in September being circulated around Europe, the United States and South America. Some of these are expected to be closed over the summer, whilst traders and buyers are travelling to Europe and the U.S. during the holiday period.

Group II prices in Middle East Gulf areas have not moved this month. With trade in and out of the region slowing, buyers have stayed away, electing to replenish stocks only after the end of August. Far East suppliers have tried to lift prices going into this region, but without success.

Prices for offers remain around present levels, but whether these will be ultimately accepted is doubtful. Light grades are offered at $1095-$1025/t, where these grades are in demand in Far East but not to the same extent in Middle East Gulf regions. The heavier vis 500N/600N has higher utility value within Middle East Gulf areas, but has eroded on price due to the length of these grades at source. Thus these grades now carry almost the same tariff as the light material, at $1100-$1135/t.


East Africa and South Africa remain concentrated on imports from Red Sea, U.A.E. and Far East, although U.S Group II trade is establishing itself in South Africa with Durban storage now carrying the range of grades. Large-scale interest has been created by the door-step availability of these Group II grades where, previously, blenders imported specific small quantities for their own use. But with the market being open for ex-rack sales, more uptake is expected for this range of grades.

West African trade has been thin this week after the arrival of two large cargoes into Ghana and Nigeria in the early part of the month. There has been talk of a further supply from Brazil, although no confirmation could be gleaned on this movement.

Offers on the table in Nigeria are being maintained around $1075-$1100/t in respect of Baltic and mainstream European solvent neutrals along with Baltic SN 900 at $1115-$1165/t, with exact price being based on specification. One cargo of material termed as SN 900 has been reported as offered into Apapa, at a level of $1028/t, possibly lower quality material with high color, but meeting viscosity standards of around 18-20 cSt at 100 degree Celsius. Bright stock ex mainland Europe is escalating due to demand and higher FOB numbers being pushed by suppliers, and is now priced $1300-$1325/t.

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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