EMEA Base Oil Price Report


The EMEA base oil markets, along with others, are experiencing a rather uncomfortable and uncertain future, with prices being decimated by market dynamics and buyers’ expectations.

With crude and feedstock levels falling further, and poor demand for all types of base oil, producers have had to cut prices to try to hold market share amidst a rising tide of availabilities, particularly for API Group II stocks. New production is contributing to an oversupply bubble which may soon burst.

Dated Brent is trading at around $81.50 per barrel, with West Texas Intermediate at $77.40, reinforcing forecasts that crude may have further to fall. ICE gas oil down is also down, to $725 per metric ton for front month settlement.

Group I FOB levels within Europe have come under the hammer, falling by as much as $50/t. The market is constantly moving in one direction and quoting fixed prices becomes near impossible. Offered levels for light solvent neutrals are $820-$835/t, along with heavier vis grades such as SN 500 around $830-$850/t. Bright stock offers are $1020-$1045/t. Buyers expect discounts on these offers by as much as $30/t.

These FOB numbers refer to snapshot prices contained in offers which have been made for products loading out of mainstream European and North African suppliers, subject to availabilities and shipping.

Local sales within Europe have followed the export market, with suppliers having to realign term and contract prices to take account of the rapidly moving market. Levels have dived and may fall further, making a number of blenders reluctant to purchase.

Buyers throughout Europe are taking minimal deliveries just to keep blending lines functioning. This hand-to-mouth existence is doing nothing to reinforce confidence of Group I producers, who as well as trying to protect market share from other Group I sources, are also under pressure from Group II avails which are rapidly becoming lower in price and are now competing with Group I grades where viscosity allows.

Levels for domestic sales of Group I base oils throughout mainland Europe are just 35-50/t higher than export levels. With markets for all products converging, this differential may be reduced further, only taking account of extra costs involved in storage and delivery.

Group II prices are set to fall further in Europe, considering announcements late last week that producers in both U.S. and Far East were cutting prices yet again, taking FCA prices $100-$150/t lower than they were two months ago. Buyers began immediately requesting price adjustments to their routine purchases of Group II grades. Sources allude to many methods used to bring prices into line, with retrospective rebates, discounts for quantity, and other marketing ploys.

In some cases, Group II has been quoted at levels below Group I, particularly for light vis grades in Europe. Levels are down further, with light vis grades ex tank at $875-$890/t and higher vis product 500N and 600N between $885/t and $915/t. There have been some cases where light vis Group II grades have been reported as low as $825/t, but this has not been confirmed for sales in mainland Europe.

Some said that Group III levels have fallen by more than 60/t since the beginning of November. Suppliers have been trimming prices according to their customer base, with a number of buyers drawing sellers attentions to prices being quoted in Far East and the U.S., where imported Group III grades are sourced. Levels being quoted on FOB Far East are $990-$1020/t for the two main grades, 4 cSt and 6 cSt. With transportation, storage and marketing costs added, and at current exchange rates, buyers are targeting 850-865/t basis ex tank within Europe.

Levels for both grades are 865-885/t basis ex tank. These levels apply to both imported and European produced Group III base stocks.

Baltic and Black Seas

Baltic prices have been affected by the same market forces as mainland Europe, with quantities of the two main grades being offered lower, at $820/t FCA. This would yield prices of $825-$830/t basis FOB, although these may erode further due to ever lower numbers coming out of mainland suppliers. One trader has reportedly fixed a large cargo for November loading at $793/t in respect of SN 500, with a further 3,000 ton quantity of SN 900 being loaded FOB at an estimated level of $958/t.

Levels in the Black Sea have fallen, with counters winning the day after sellers had tabled offers that receivers dismissed. The latest FOB levels for SN 150 and SN 500 are as low as $795/t, but with most suppliers only offering CIF delivered prices, levels are perhaps ratcheted up $5-$10/t using the freight angle. Delivered levels for material going into Gebze and Aliaga are $830-$840/t CIF. Mediterranean parcels are still favored by some Turkish importers, many of which include parcels of 250-700 metric tons of bright stock in addition to the Group I SN 150 and SN 500 grades.

Another offer for a large parcel of Group II grades has purportedly been made to some Turkish receivers, with reports that the landed price for three grades is below $850/t. Efforts are being made to confirm the source and reliability of this report.

Middle East

Levels for Group I supplies into and out of Middle East Gulf regions have dropped in line with Far East and European moves. Offers have been $875-$885/t for the prime quality Group I solvent neutrals, with bright stock as part of these offers at $1090-$1100/t. Russian material has also been offered, both from Baltic and from Black Sea sources. Some 12,000 tons has been offered from Baltic traders, whilst Black Sea options on shipping are currently being examined for cargo of some 7,000-9,000 tons. Prices for the Baltic and Black Sea cargoes could pan out at $855-$860/t basis CIF United Arab Emirates ports.

Group II offers have shown the effects of recent price decreases in both Far East and U.S., with numbers reduced $25-$50/t depending on supplier and source. Levels for December arrival into the Middle East Gulf are now $895-$925/t, with some suppliers commenting that they will not be posting lower prices prior to the year end, regardless of crude and feedstock movements.

All grades remain freely available, and with a potential growing problem of containment for some producers, this region is seen as ripe for taking surplus material prior to end of December and even into January for cargoes which can be shipped out before Dec 31.


Reports from East and South Africa have identified these regions as untapped markets with huge potential. The finished lubricants business is destined to grow exponentially over the next ten to twenty years with industry and commerce developing at rates unmatched by most other regions around the world.

Group I prices have dipped for the two producers in South Africa, along with imported Group II, Group III, and naphthenic grades. FCA levels for Group I grades are reported at $1025-$1060/t for the solvent neutral range, with imported bright stock landed and being resold near $1125/t.

Nigerian receivers are poised for the year-end buying spree which is anticipated to start around mid-November and continue through loadings until Dec. 31. Potential sources for material are many, with enquiries into U.S., South American, Baltic and mainland European suppliers.

Receivers are looking to import a total of 60,000-75,000 tons of base oils, with a number of traders already in negotiations to fill this void. Current offers for Group I and Group II grades are still considered to be a bit high, with most importers looking for rock-bottom prices, which they expect to achieve before year end.

Levels reflect current FOB numbers from the various sources, with Group I solvent neutrals at $880-$895/t, and bright stock landing at $1075-$1090/t. Various offers for parcels of SN 900 are ranging from $978/t -$1120/t, but specifications other than viscosity can be very different from one parcel to another.

Group II levels may be landed below those for Group I solvent neutrals, possibly encouraging Group II use in price-focused West Africa.

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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