EMEA Base Oil Price Report


Summer has finally arrived in EMEA, with buyers and sellers reserved as they begin preparing for the post-summer activity of early September.

Currently, Europes ample supply is not causing price erosion, since sellers are very aware that buyers looking to restructure inventories will soon return with healthy appetites.

Dated Brent, static at around $107.30 per barrel, perhaps indicates more stability and adequate crude supplies despite problems in Syria, Ukraine and Iraq. ICE gas oil, however, is showing strength, rising some $10 per metric ton to trade at $894/t for front month settlement, perhaps reflecting the high diesel demand of European driving season.

API Group I FOB base oil prices remain unchanged. Light solvent neutrals are $1010-$1015/t, along with heavier neutrals at $1010-$1030/t. Bright stock remains the one grade in demand by some traders looking to fill August and September cargoes to West Africa, Middle East and Far East. Offered prices are $1185-$1235/t, with some Mediterranean suppliers willing to push discounts to particular buyers to move parcels of this grade on a prompt spot basis.

Prices pertain to export parcels of base oils sold or offered ex mainstream suppliers, based in mainland Europe or North Africa.

Local European prices appear to be flat, with little activity reported. Many blenders are using the summer to complete planned maintenance, with some plants closed during August. Others are running with skeleton staff, resulting in minimal base oil procurement.

The few buyers in the market report that prices are steady, with few changes in any Group I grade over the last few weeks. The differential is maintained between higher domestic levels and export pricing at around 110-130/t, on the basis of ex rack sales.

Group II and Group II+ imports into Europe are reportedly increasing, but ex tank sales are quiet, with no price changes. Many buyers were anticipating these grades to move downward during the second half of this year due to source oversupply occurring both in the Far East and the U.S., but European markets appear to be snug with no main players announcing Group II surplus. With a modicum of control over quantities of these grades being imported, this market may be protected from oversupply, but all it takes is one or two producers to try to expand market share, and this market could be tipped into freefall on prices.

Levels are thus unchanged at $1095-$1140/t in respect of light vis grades, with heavier 500N, 600N, and Group II+ grades at $1215-$1315/t. All prices are basis ex tank Antwerp-Rotterdam-Amsterdam-Germany.

The Group III market within mainland Europe remains separate from the Group I demolition scene, and the growing import-based Group II scene. Prices are moving only narrowly. Small changes are mainly brought about by the offer or removal of discounts which can be based on new business, increased offtake or even just regular contracted lifting of these barrels. Maintained levels are 960-975/t in respect of 4 cSt grades, with 6 cSt products coming out at 965-980/t. Prices are based on ex rack Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Sales and offers from sellers of Russian and Belarus base oils operating in Baltic have receded during the last few days, with a number of sellers offering discounts from published prices to try to move material out of stocks. Most have adequate avails of SN 150 and SN 500, with SN 900 parcels becoming available during the first half of September. Interest is slow at the moment with a definite lull in larger parcels being assembled for deep sea markets in West Africa, Middle East and India. One cargo is being loaded for Nigeria, with the performing vessel loading in the Baltic and further topping-off with heavier material, perhaps bright stock ex northwestern Europe or Atlantic Mediterranean.

Prices are softening a little, with sellers prepared to entertain some of the more reasonable counters from traders looking to finalize cargoes this week. Levels for SN 150 and SN 500 are now $972-$988/t.

From the Black Sea there has been notification that around 5,000 tons of Russian SN 500 is available ex Theodosia for prompt shipment, and although the target market for this material is possibly Far East, some interest is being generated from receivers in United Arab Emirates. Prices for this type of parcel can be negotiated, and netting back to an FOB level would possibly yield around $955/t. This material is not available for entry into the local Turkish market, since prices for this destination would be pitched $20-$25/t higher.

Uzbek grades are still being made available ex Fergana refinery by a couple of traders, but interest is thin at $980-$990/t basis CIF Izmir port. Receivers are suggesting landed numbers under $950 which cannot be achieved at this time with FOB levels and extra freight to this port.

Russian is extending support for Syria by sending base oils, since supplies into this region cannot come from U.S. or European producers or traders due to U.S sanctions and European trade restrictions. With most blending operations in Syria now in ruins, and with Homs and Banias refineries under military supervision, provision of finished blended lubricants has taken a back seat.

Prices heard bear no resemblance to EMEA base oil prices, with some Group I solvent neutrals SN 150 and SN 500 numbers being quoted at around $1800/t in local currencies.

Middle East

At the end of Ramadan and the start of Eid, Middle East Gulf business has been suppressed, with many players not even engaging in discussions until the end of August. Supplies of Iranian SN 500 are available, but with few buyers interested, prices are starting to fall in what might be seen as a vain attempt to move these stocks out of storage in ports such as BIK. Markets in areas such as west coast India are showing little interest, hence numbers are falling, in dollar equivalent terms, to around $1010-$1025/t basis landed U.A.E. U.A.E. traders are committed to putting these grades into storage before eventually moving these grades perhaps to Far East markets where Group I is in demand.

Local Group I production and imported material is still flowing into Middle East Gulf regions, and there could be interest in looking at Russian exports from Black Sea. Prices for these grades remain higher than local Iranian supply, with solvent neutrals between $1075/t and $1125/t and bright stock, where available, landing at $1195-$1255/t. Sources for bright stock have been disclosed as Brazil, U.S., Indonesia and Thailand, although the latter supply location has had its own set of problems. European-sourced bright stock is also under consideration.

Group II cargoes of imported material continue even in the absence of many of the Middle East Gulf commercial players. These cargoes are contract barrels and some spot supplies, most of which are Far East-sourced. Prices are starting to fall, and for August deliveries there are unconfirmed reports that levels may have dropped $20-$25/t in respect of both light and heavier vis grades. The heavier vis 500N and 600N are the mainstay of Group II supplies into this region. Prices are therefore estimated to be $1065-$1085/t, with heavier vis 500N and 600N around $1070-$1095/t. These levels are extremely close to Group I levels for premium grades, and if this trend continues, then Group II material may soon be priced below Group I in the Middle East Gulf.


East Africa and South Africa reports few new base oil imports. Sources in South Africa say that new storage facilities are being evaluated by a number of third parties, which could assist lube oil importers gain further foothold in what is considered an ultra-conservative market.

West Africa remains relatively quiet with prices stable in offers. Traders involved in this market are offering cargoes for end of August or early September arrival, loading out of the Baltic, northwestern Europe, the Mediterranean and the U.S. One Brazilian parcel was being talked around the local scene in Lagos, but the latest rumors are that this cargo has been placed into the Far East.

Prices for Group I arriving into Ghana and Nigeria are being tempered in spot cargoes, whilst contracted index-linked prices remain high due to a lack of revisionary movement by publishers of these numbers. Levels for light and mid vis solvent neutrals range at $1035-$1065/t and heavy neutrals such as SN 850 and SN 900 landing at $1033-$1130/t depending on spec and source.

Bright stock still remains highly prized, moving upward to $1270-$1320/t, levels which are being resisted by receivers who are telling sellers that base oil prices are falling and that this should be reflected in bright stock values. Certain receivers have issued counters as low as $1190/t, a level which is clearly impossible given the FOB prices for this grade. Even the poorest quality bright stock could only be landed in Apapa at around $1230/t.

Correction: Due to a typographical error, last weeks report incorrectly reported the price range of solvent neutral 900 on a DAF basis (Baltic and Black Seas region) as $1,005-$1,118 per metric ton. The range was actually $1,005-$1,018.

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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