EMEA Base Oil Price Report

Share

Players in European, Middle Eastern and African base oil markets were cautious this week in light of factors such as an unstable euro and terrorism in North Africa.

Crude and feedstock prices have gone into limbo. Dated deliveries of Brent crude are $62-$65 per barrel and West Texas Intermediate is around $59.50 per barrel. ICE gas oil is at $575 per metric ton.

Europe

Shipping enquiries suggest that the arbitrage may be opening for European base oils to move to the U.S and Far East, although one large enquiry has just been placed with a U.S. east coast refiner for 10,000 tons of API Group I base oils into Antwerp-Rotterdam-Amsterdam. The scene is a little cloudy, with only specific grades being open to the arbitrage, whilst others remain available in sufficient quantities to maintain prices.

Group I FOB prices saw only small adjustments in some cases, and can be described as stable to weak. Buyers have made counters to almost every offer, which sellers accept when reasonable.

Levels for light solvent neutrals are still $540/t-$550/t, or perhaps $5/t-$10/t less. SN 500/600 grades are maintained at $590/t-$610/t, again with one or two minor adjustments for prompt acceptance. Sellers, however, appear to be holding firm with clear and designated margins, and not wanting to lapse into the realms of lower netbacks and poorer contributions.

Bright stock also remains unchanged at $935/t-$965/t for FOB offers.

The prices above refer to large parcels of Group I base oils offered and sold on an FOB basis loaded ex mainland Europe and North Africa, subject to availability of each grade.

Local prices for Group I base oils are also relatively unchanged. Levels are maintained for those purchasing on a monthly or quarterly tariff, and with the summer fast approaching, prices are not expected to vary until September, unless some quantum movement occurs in crude and product prices. Levels are 65/t-95/t over export numbers, reflecting extra handling and storage costs for delivery by road and barge.

European Group II is showing small upward price adjustments, perhaps taking account of recent source increases from U.S. and Far East suppliers. With no local production for price comparison, these imported base oils may be subject to price amends from July 1.

Buyers, however, are staying away from purchasing further large quantities of these products until after the summer. Exchange rates have swung back in favor of the euro over the past few weeks for sales made in this currency, but distributors are keeping a sharp eye out for any subsequent changes in exchange rates following the possible exit of Greece from the single currency.

Light vis grade prices are up $5/t-$15/t from July 1 depending on grade, from $710/t up to $765/t for extremely low vis 65N.

Heavier viscosity grades 500N and 600N are also up to $780/t-$845/t, subject to carrying requisite approvals and formulation specs.

Group III markets around Europe carry on stably, as if nothing has happened over the last six months, with all local suppliers back in full production. Prices for both 4 centiStoke and 6 cSt grades are still 915-945/t on an ex-rack basis Antwerp-Rotterdam-Amsterdam.

Baltic and Black Sea

Prices for Russian and Belarussian exports out of the Baltic were reported last week as being subject to weaker numbers, but this week stability appears to be the call, with levels now $510/t-$525/t in respect of quantities of SN 150, with standard Russian spec SN 500 at $540/t-$555/t.

Concessions may have been made on FOB prices for a large parcel of some 7,000 tons loaded out of the Baltic and Antwerp-Rotterdam-Amsterdam for discharge into Turkey, since the freight for this parcel would have been much higher than traditional cross Black Sea costs. The two-port load would suggest that quantities of bright stock would have been added to the Baltic routine grades, although this is not confirmed.

Other fixtures confirm the contracted 3,000 tons per month ex Liepaja into Antwerp-Rotterdam-Amsterdam. SN 900 prices have been offered at $633/t, basis FCA, slightly higher than last week, which perhaps reflects continuing constant demand for this grade going into West Africa, and other export markets.

Black Sea Russian cargoes seem to have disappeared this week with few, if any, reported movements from Kavkaz to Turkey or beyond. Turnarounds may be responsible for the lack of base oils coming out of the southern Russian refineries, but with start-ups programmed for July 1, this temporary shortage may soon be relieved.

There are no large enquiries for parcels into the United Arab Emirates or the west coast of India, which may suggest that business may be slower for the next three months or so.

Greek sales of Group I grades continue to be reported with parcels of 4,000-5,000 tons finding their way into Gebze. These sales of SN 100, SN 150 and SN 600 now form part of a regular trade between Aghio and Gebze. SN 100/150 will be landed CIF at around $565/t with SN 600 prices around $595/t.

Red Sea trade appears to have entered the next supply round, since a number of cargoes are being worked ex Yanbu and Jeddah for Oman, Fujairah, and other U.A.E. ports inside the Gulf. Small parcels of 2,000-3,000 tons are being prepared for July loading. It is not clear why these parcels could not be combined in one form or another, unless there are draft restrictions at discharge ports. Even with Ramadan ongoing for another couple of weeks, it seems to be business as usual for these contracted routine deliveries.

Middle East Gulf

Trade is slow in Middle East Gulf regions. With Ramadan and the summer slump, many traders and blenders are running down inventory, waiting until after the holiday period before restocking Group I base oils.

Iranian exports of SN 150 and SN 500 have dipped to $590/t-$595/t and $595/t-$600/t, respectively, with no clear mandate regarding the Western sanctions. Some large cargoes of base oils and various other products have recently been moved out of southern Iranian ports, suggesting that foreign flagged vessels have been able to load under protection and indemnity insurance rules.

Higher spec Group I base oils, such as those being imported from Saudi Arabia, will be landed into U.A.E. at $585/t-$620/t in respect of the range of neutrals, with quantities of bright stock at around $1035/t.

Prices for Group II imports into markets such as Qatar and U.A.E. have continued to edge up over the last few weeks, although buyers have resolutely refused to entertain higher prices. Receivers consulted maintain that fundamentals are weak and that no argument for raw material increases can hold water. They also state that process costs have fallen, thus increasing producer margins for Group II products.

Offers for the range of light vis grades are $640/t-$655/t CIF, with the more popular heavy vis grades at $775/t-$795/t, numbers which receivers consider $25/t-$30/t too high.

Africa

A part-cargo of some 2,000 tons is to move from Antwerp-Rotterdam-Amsterdam to Durban, furthering the imports of bulk base oils which have been filtering into South Africa. Importers are also examining offers for supplies in flexies which are being made from various sources, and which are around $745/t basis CIF in respect of quantities of SN 500.

In West Africa, a couple of large parcels are being negotiated for import into Nigeria. The first one is for around 16,000 tons of base oils to be loaded ex U.S. Gulf Coast during July, and the occurrence of this cargo is rather unusual due to the recent increases in FOB prices which producers of Group I in the U.S. have recently implemented. European FOB levels are being countenanced for export to U.S., yet this parcel is being worked from a higher-priced source, with higher freight. The other parcel is related mainly to the Ghana tender and is being programmed to load out of Italy during July.

Baltic sellers are seriously looking at cargoes for August but may not have enough stock to offer barrels for July lifting. This may be one reason why alternative supplies from sources such as the U.S are being investigated.

Prices for Group I grades into West Africa may start to firm on the back of higher FOB levels and increased freight costs, although many believe these increments will be marginal. Yet buyers are aware that large parcels of Group I base oils are in demand in this region, and with Group I supply status reaching a balance almost on a global scale, large slugs of material may not be easy to come by for these markets in the future.

With current avails, prices are $645/t-$690/t for the range of solvent neutrals, with bright stock ex Europe or mainline U.S. producers offered CIF/CFR at $1045/t-$1070/t. Baltic supplies for August will be similar in terms of the neutrals, but SN 900 from that source, if available, will be higher priced that previously due to demand, and will probably land at $845/t-$870/t.

Offers for containerized flexi-bags of Group I grades continue to be offered to receivers in Cote d’Ivoire and Cameroon at $$825/t-$855/t, with quantities of SN 900 at $895/t.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly at pumacrown@email.com.

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other