EMEA Base Oil Price Report


With geopolitical vagaries in Ukraine, Iraq and Syria taking a front row seat, base oil business is curtailed. Throughout the rest of EMEA, activity is mixed.

Crude oil and feedstock prices appear to have recovered from last week’s lows, and in the case of Dated Brent, are moving back to levels around which this marker stood prior to the events in Iraq and Ukraine. Dated Brent is around $107.50 per barrel. ICE gas oil posted at $882 per metric ton for August front month settlement, some $10/t higher than last week.

European API Group I FOB levels appear to have remained within last weeks range, perhaps excepting bright stock, which remains in demand, and subsequently, relatively short. Light solvent neutrals are maintained at $1010-$1015/t, with SN 500 offered and sold at $1010-$1030/t.

Bright stock has advanced some $10/t this week, with markets such as West Africa showing healthy demand. Prices are now being tabled at $1205-$1235/t, with some sellers refusing to sell this grade on its own, preferring to move SN 150 and SN 500 along with bright stock in combination.

The prices referred to above relate to FOB levels for cargo-sized lots of Group I base oils made available ex main European or North African supply points always where availability allows.

Local European sales are quiet, with many blenders running down activity for the holiday season. Some are using this period to repair machinery, with plans to restart business at the end of August. Sellers do not seem to be concerned about the downturn in sales, commenting that they expect that post vacation supplies will make up for low activity now, with many buyers looking to restock and replenish inventories after summer. Prices therefore remain at around 110-130/t above export, basis ex rack, or FCA.

Group II and Group II+ prices within the European mainland have also remained static, with few discernable changes. This may be due to either being linked to Group I levels, or perhaps the vacation effect is also holding these grades back. With the first cargoes of imported grades arriving from Pascagoula this month, the market is braced for further avails from Far East and U.S. suppliers, who are looking to gain a foothold in what must be seen as one of the most attractive markets: a large demand swathe with no (or very little) local indigenous production of Group II base stocks. Also, with the impending oversupply scenarios being postulated in both Far East and the U.S., producers are eager to expand into regions where surplus output from new facilities can find a home.

This particular base oil market is forecast to become ultra-competitive in months and years to come. At the moment, prices are maintaining a justifiable premium over Group I products, but this may not be the case in the future. As Group I grades become less available due to refinery and plant closures, the opposite may occur with Group II base oils. However, at this stage, levels are in the same spreads as last week: $1095-$1140/t for the light vis grades 60N -220N, coupled with the heavier vis material 500N and 600N at around $1215-$1315/t. All prices are basis ex tank Antwerp-Rotterdam-Amsterdam-Germany.

Prices for Group III grades within mainland Europe are resolutely static and have been for some months, with both producers and sellers of imported barrels and buyers content to leave the market as is. There are some reports of discounts being applied sometimes retrospectively hence it is deemed proper that the ranges be extended to include these net prices.

Levels are therefore set in wider spreads, of 960-975/t in respect of the lighter 4 cSt grades, and 6 cSt material at 965-980/t. Prices are based on ex rack selling levels in Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Baltic sales of Russian and Belarus exports have as yet been unaffected by events within Ukraine, and local expectations are that even with the possibility of the severest sanctions being applied against Russia by the West, this market should not bear the brunt of any constraint, according to distributors and traders in the Baltic. As mentioned last week, prices have been subject to fierce negotiations, with traders looking to buy cargoes by countering offers. This has calmed down, with middle ground being achieved, perhaps more in favor of sellers at $980-$997/t for the two main grades SN 150 and SN 500. Restricted quantities of SN 900 with reasonable color around 4.5 and viscosity of about 18-20 cSt are being offered on a DAF and FCA basis at around $1005 and $1118/t, respectively, taking FOB numbers for this grade to $1023-$1040/t.

Black Sea trade is once again hit hard by the events within Ukraine with many traders indicating that Russian avails of SN 500 and to a lesser extent SN 150 are currently not available from Black Sea loading ports. Uzbek grades are still available ex Fergana, but are less in demand than the Russian material, which is higher in spec. Prices are difficult to pinpoint this week with all local and regional markets in a state of flux.

Indications only are established for Uzbek grades, at $975-$985/t CIF main Turkish ports, with Russian grades loading ex Theodosia put on hold, at least until clarification can be gleaned as to avails and FOB prices.

Middle East

Near Middle East and Middle East Gulf regions are slowing down to the point where only cargoes and deliveries of material which were finalized earlier or are part of contracted supplies are now arriving into receivers. New business is rare, since the end of Ramadan and soaring temperatures has many players leaving for a month.

Yet another round of rumors surrounds the new building of a Group I facility within the United Arab Emirates, possibly at Fujairah, where VGO feedstock could be available for a stream of Group I solvent neutrals and a bright stock furfural unit to be established. It must be emphasized that these are purely rumors, but with this region highly dependent on higher vis products for many of the finished lubricants blended in this region, the possibility must be regarded as real. Dependence on current supplies of Group I from Iran, Saudi Arabia, and Europe cannot be guaranteed, hence this pipedream could become reality.

Prices for local Iranian supplies have dipped, but only due to demand falling over the summer. Equally, avails of Iranian base oils is not as forthcoming as they have been the last few months, with some supplies of material crossing the Iraqi border due to shortages caused by the ISIS insurgency. Levels for FOB sales ex BIK in dollar equivalent are around $1035-$1050/t, falling back by $10-$15/t this week. Local supplies of mainstream imported Group I base stocks are in line with previous prices at $1075-$1110/t, in respect of the range of solvent neutrals, with bright stock from various sources such as U.S., Brazil, Europe and Indonesia landing at $1185- $1245/t, depending on source and quality parameters.

Middle East Gulf levels for Group II products appear to have moderated, in that levels are being maintained at current levels for August deliveries. Perhaps because these parcels were negotiated some time in advance, prices have been extended to cover a longer period than normal. However, Far East producers and sellers are particularly long in heavier vis Group II grades, and are keen to place as much volume of the products into the Middle East Gulf as possible. This may also account for static or fixed price levels. Light grades 60N through 220N are quoted between $1085-$1020/t, with heavier vis 500N and 600N at $1190-$1125/t.


East African receivers have reported SN 500 being delivered into a number of ports from U.A.E. at $1135-$1180/t depending on quantity and number of containers with flexi bags. Similar prices have been reported CIF Durban, mainly for SN 500. There are further reports of another parcel of SN 500 being marshalled either from Baltic or Brazilian sources for arrival into Durban some time during August. Other shipping reports suggest a Group II cargo loading out of U.S. Gulf Coast, perhaps from Pascagoula production, with destination of Durban, where this major has already established a storage capability.

West African base oil prices for material going into markets such as Ghana and Nigeria have flat-lined over the last month, reflecting the steady and weakening FOB numbers coming out of Europe and the U.S. Nigerian receivers are expecting a large shipment of Baltic loaded neutrals, including some 4,000 tons of SN 900. Cargoes going into Ghana with the contracted Group I grades for Tema, are more often than not being topped off with additional material for Nigerian buyers.

Prices for some of the grades have dipped slightly for new offers for August cargoes, although bright stock parcels have firmed in line with increments being applied to FOB levels. Prices are estimated at $1040-$1075/t for Baltic and other European neutrals, with SN 900 now falling between $1057/t and $1145/t, varying with characteristics and spec.

Offers for European bright stock are being tabled at close to $1300/t, but these levels are being keenly countered by receivers looking for around $1230/t, basis CFR Apapa. These levels cannot be entertained with European products, with the result that some buyers are turning to alternative U.S. or Brazilian barrels. Therefore, the spread established for all bright stock grades is expansive, between $1235/t and $1308/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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