EMEA Base Oil Price Report


Crude oil prices have tumbled by some $3 per barrel during the past seven days, with Dated Brent now standing at around $101.50 per bbl in late Tuesday trading. This is the lowest level for Dated Brent in 14 months, and West Texas Intermediate has fallen to a seven-month low at $95.45.

These crude realignments are taking place as investors sell positions before the end of the September contract period. Lower crude numbers are being attributed to the easing of tensions within Ukraine and Iraq, but also to a growing surplus within the United States. As a petroleum product marker, International Commodity Exchange gas oil front-month numbers are sitting at $857 per metric ton, some $22 lower than last week.

Base oil prices within European markets remain largely unscathed by the underlying trends in crude and products, possibly due to two main reasons. One is that most of Europe is on vacation, with buying and selling of base oils probably about the last item on most peoples’ minds. Also, there typically appears to be a time lag between crude adjustments and base oil price changes.

Light solvent neutral grades remain between $1,010-$1,015/t, with heavier grades SN 500 and SN 600 around $1,010-$1030/t. Prices for bright stock may have firmed marginally due to perception rather than interest, but these levels may be a reaction to potential shortages of this grade elsewhere around the globe, such as the Far East and Middle East regions. Levels for relatively large quantities of this grade are now assessed at $1,180-$1,225/t.

These prices pertain to FOB offers for Group l base oils available from mainland European and North African producers, always where availability allows for these offers and sales to be made.

Domestic business within Europe remains very quiet with many blenders closed for August, or at least running on short time. This market will only return to life in September, when weak fundamentals may trigger price changes. The notional price differential for local sales of Group l grades over export levels is steady at 110-130/t.

API Group ll and Group ll+ sales within the various European markets are also reported as quiet with few enquiries for new business. Source prices from producers in the U.S. and Far East have been falling for these grades, particularly for the heavy-vis products, which ultimately may the overall market when it reopens in September. Traditionally, light-vis Group II/II+ grades have been marketed in Europe as viable alternatives to Group l material. In some cases, certain European producers have closed production of Group l light grades and adopted Group ll base oils as replacements. This picture may change as price pressure and availabilities for Group ll stocks grow.

There is no doubt in many buyers’ minds that there will have to be a realignment of prices for Group ll products, since it is now feasible that prices for light and heavy grades are converging, as are Group II and Group l numbers. However, at this point in time price levels are maintained as previously reported. Light-vis products, which include 60 through to 220 neutrals, are at $1,095-$1,140/t, while heavier grades are $1,215-$1,315/t. Prices are all quoted on basis ex-tank from Antwerp, Rotterdam, Amsterdam and Germany.

Group lll levels are being challenged by the few buyers that are still active within the European mainland, with counters of some 10-20/t coming from these parties. Comments received this week indicated that these grades must come into line with other markets where prices would appear to be much lower.

But there is some confusion between locally produced Group lll grades, and imported material. European producers are holding on to the argument that their prices provide necessary returns and that local production has a much different cost structure.

Prices this week are kept within the same ranges as last week, with both 4cst and 6cst grades between 965-980/t for sales made ex-rack from different supply points within the European mainland.

Baltic and Black Seas

Baltic Sea trade appears to be somewhat muted since prices being sought in offers from the various traders and distributors in that region are being perceived as uncompetitive within Europe. Even export opportunities are being limited, sometimes by regions and countries that have adopted trade sanctions against any form of Russian exports

Offers are being made for the two main grades, SN 500 and SN 150, in the range of $980-$1,000/t, basis FOB, which is keeping these grades out of European imports purely on a price basis. Buyers trying to build cargoes for export to West Africa, and other regions are trying to push prices lower by up to $50-$60/t. These levels are being dismissed as derisory by sellers claiming that they cannot purchase FCA barrels from Russian refineries to achieve these levels.

There have been rumoured offers above $1,050 this week for SN 900, meaning receivers in West Africa will have to decide whether this grade remains competitive against lesser quality bright stock which could be imported from the U.S. or Brazil

Black Sea buyers continue to issue a number of enquiries for grades such as SN 100, SN 150 and SN 500. One enquiry for a total of 5,000 tons will possibly be covered from the Mediterranean rather than from Uzbekistan, where the availability of SN 500 is restricted. Further to last week’s rumours of a large quantity of a U.S Group ll light-vis grade being offered to Turkish buyers, two parties have commented on this offer, though the source and trader remain unclear. However, another independent parcel has been offered into the Middle East Gulf area.

Prices for Mediterranean mainstream material landed into Gebze, Turkey, are reported at $995-$1,020/t for SN 150 and SN 500 grades, with Uzbek prices for SN 150 some $25-$30/t lower

Middle East

Middle East Gulf trade has been subdued this week, with many of the key players throughout the Gulf absent from their desks. But those that remain have thrown up a number of interesting facts regarding Iranian supplies that have officially been under sanctions. Iranian producers have said that they expect imminent news that sanctions will be lifted and that this will return the sales and exports of Iranian base oils to pre-sanction levels.

This news could not be corroborated by any official source, but there are suggestions that a nuclear agreement may be close, and that Iran may play an important role against the insurgent I.S. movement within Iraq.

This has not alleviated price pressures on the remaining exports’ from Iran, which are being handled through United Arab Emirates trades. These parcels are coming under further fire from Indian receivers that appear to have few requirements for the SN 500 grade. An export to Malaysia appears to have stalled, at least for the time being, and with levels now between $980-$995/t basis FOB U.A.E. ports, these would netback to prices some $15-$20/t lower ex-Iranian ports.

Local Group l prices have also slipped from previous levels, with mainstream quality base stocks at around $1,035-$1,050/t basis CIF Middle East Gulf ports. Bright stock appears to be in demand again within the Gulf region, since a great deal of the finished lubricant slate from this region contains high-vis blend components, of which bright stock is one. Receivers are looking at supplies from Indonesia and Thailand, although other sources such as the U.S., Brazil and even Europe are being considered.

It is anticipated that bright stock will now land into the U.A.E., for example, at around $1,260-$1,275/t.

Group ll imports into Middle East Gulf markets have been relatively few this month, with September being cited as the month when the market will return. September selling levels fell again this week, with prices of $1,035-$1,050/t being reported in one offer for both light and heavier grades. Sellers appear to have bowed to the counters received from buyers in this region over the past few weeks.


African markets in the east and south of the continent report no new activity since last week, with the question of the SAFOR refinery still not unravelled.

West African markets are coming out of the wet season and may expect trade to increase over the next few weeks. Ghana contract cargoes continue to arrive from Central Mediterranean sources, normal as partial cargo with other barrels for Nigerian receivers on board the same vessel.

Prices are maintained as expected and as assessed last week with Baltic and European mainland cargoes now competing. With the extra freight element, Baltic FOB numbers will have to come into line against European and other sources for Group l base oils. Landed prices in Nigerian ports are being offered at between $1,030-$1,055/t for the range of solvent neutrals, but now SN 900 has been increased to around $1,110-$1,135/t. Bright stock is on offer as partial parcels at $1,165-$1,215/t depending on quality, this being part of cargoes of 8,000 tons, made up of either two or three grades.

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