EMEA Base Oil Price Report


European, Middle Eastern and African base oil prices appear to have leveled out with nothing that would suggest impending movements up or down. Sellers are keen to take advantage of any cover provided by rising crude oil and feedstock costs, but with adequate supply for all cuts, buyers cite an undercurrent of weakness.

With dated deliveries of Brent crude having breached $53 per barrel, there was hope that crude prices would progress following the near-accord between OPEC and Russia. However, some OPEC producers are exempt from cutting production and Iran, Libya and Nigeria may actually increase output, with Iran seeming determined to hike sales to new highs.

Dated deliveries of Brent crude traded at $51.50 per barrel for front month December settlement, with West Texas Intermediate crude at $50.10 for November front month. ICE LS Gas Oil, meanwhile, has decreased to around $460 per metric ton on the back of the crude decreases of the past few days.


European API Group I FOB offers are unchanged, with light solvent neutrals remaining $480/t-$495/t and SN500/600 static at $565/t-$585/t. Bright stock, having firmed a little during the previous week, is $875/t-$905/t, with no reports of any shortages. There were a surprisingly large number of cargoes fixed during the last 10 days, but closer examination shows a distinct growth in intra-company trade.

These prices refer to large cargoes of Group I base oil supplied or offered on an FOB basis ex mainland Europe.

Local or domestic European prices also seem to be marking time but could face adjustments due to fluctuations in currency exchange rates. The devaluation of the British pound has drawn much attention, but the euros value against the U.S. dollar has also dropped. If this gets factored into base oil prices, the differential between exports from Europe – which are transacted in dollars – and sales within the Euro Zone could increase to around 100/t-130/t.

Group II markets remain stable with no real evidence of U.S. sources price changes being levied on European buyers. Sellers maintain that despite major turnarounds, there are no shortages and all contract supplies will be maintained, and even that new spot sales will be encouraged. Imports continue unabated, with material from Singapore and U.S. paving the way for the new 2017-2018 local production of globally standardized Group II material.

Prices remain unaltered, with light vis grades at $555/t-$585/t and heavily vis 500N and 600N between $725/t and $785/t, or euro and sterling equivalents. Exchange rate factors have not hit this sector of the market yet, although some buyers have now requested prices in U.S. dollars. These levels are relevant for large bulk parcels of Group II base oils imported into Europe and U.K. with local ex-rack prices in euros and pounds sterling taking account of extra handling, storage and delivery costs and exchange rate differences. These extra costs can be 55/t-80/t or 50-75/t

Group III markets involve some players looking to the future and increasing local sales of indigenous product instead of meeting supply commitments by bringing in barrels from Middle East Gulf sources. Reasons for this have been declared private and confidential, but one reason may be to counter the imports from new production which can only be seen as competition. And, having logistical advantages by using local production, sellers may be able to attain acceptable netbacks and contributions from these supplies.

Prices quoted refer only to material sold on an ex-tank or truck delivered basis ex Antwerp-Rotterdam-Amsterdam and this week they remain at 750/t-770/t in respect of the 4 centiStoke and 6 cSt grades with 8 cSt material at around 740/t.

Baltic and Black Sea

Baltic trade has been largely confined to sales into northwestern Europe and the U.K., with the continued absence of enquiries for West Africa. However, this local trade has become more prolific with an increasing number of cargoes finding their way into Europe. Cargoes totaling around 20,000 tons per week are loading for Antwerp-Rotterdam-Amsterdam, the east cost of the U.K., and even Mediterranean receivers. Although FOB levels remain largely flat, local distributor prices in euros and sterling are starting to increase rapidly since the exchange rate movements of late. Increases will be passed on to consumers buying finished lubricants, with many blenders already advising buyers of large increases to be applied from Nov. 1.

FOB prices remain stable, with SN150 at $475/t-$490/t and SN500 at $545/t-$565/t. Offers for SN900 are around $640/t FOB with smaller quantities of SN1200 available on a preorder basis only with a lead time of around four weeks from nomination to delivery FCA. This grade is priced around $655/t basis FCA.

Confirmation of 2,500 tons having been fixed clean has been received through shipping channels. These parcels are loading out of a southern Baltic port to U.A.E. and the west coast of India, and further cargoes are contemplated for this single grade, which is possibly bright stock.

Black Sea reports contain information regarding another Kavkaz, Russia, loading of around 8,000 tons bound for the U.A.E. and Singapore. This will likely be mainly SN900, although receivers in U.A.E. have recently reported that this grade could not be utilized easily in U.A.E. markets.

Enquiries for Mediterranean-sourced Group I base oils for Turkish receivers are also in the market for October loading, with estimated levels of around $535/t for SN150, around $595/t for SN500/600, and $887/t CIF for bright stock. Small quantities of Russian SN500 are also being offered into Turkey at around $578/t CIF.

Middle East Gulf

Buyers in Jordan have covered their requirement for a 3,000-ton cargo of Group I SN150 and SN600. A Greek source has loaded the cargo and will discharge into Aqaba promptly.

Middle East Gulf regions appear to be increasingly using larger quantities of various base stocks. Exports record Iranian base oils out of Bandar Bushehr and Bandar-e Emam Khomeyni (BIK) going to the west coast of India, with prices unchanged since receivers in India were not prepared to accept higher numbers on a delivered basis.

Netback levels to FOB levels are assessed at $585/t-$600/t for the higher spec SN500, which is only available from one exporter in Iran. SN150 is also available in smaller quantities, but most of this material goes into U.A.E. as blendstock for local operations. SN150 is estimated to be around $545/t FOB Iranian southern ports, with U.A.E. FOB levels at $595/t. SN500 ex-tank U.A.E. is around $660/t depending on quantity and specification.

Group I base oils from Saudi Arabia are estimated to be around $585/t in respect of SN150; $675/t for SN500; and around $1000/t for bright stock. Similar prices in respect of SN500 and bright stock are also offered ex U.S. There are offers to receivers in U.A.E. for Group I material to come in from the U.S. East Coast and/or other sources, but with lead times a negative for these movements, relatively local Saudi Arabian availability appears to be preferred, particularly for contracted receivers.

There are no reported new exports of Group III base oils, although it is considered that more of these grades will emanate from Middle East Gulf sources soon.

New planned Group II production, and cessation of Group I neutral availability in Saudi Arabia, appears to have been delayed by up to one year, to 2018. With the region perhaps not yet aligned to using Group II as a replacement for Group I solvent neutrals, it may take longer for Group II base oils to play a major role in the Middle East Gulf region.

Current suppliers are reluctant to move to lower prices to accommodate competition with Group I neutrals, with prices at $525/t-$550/t for light vis grades 100N through 220N, and heavier 500N and 600N between $705/t and $725/t CIF. Group II grades continue to be delivered to blenders throughout Middle East Gulf regions at $40/t-$120/t higher than CIF levels for large parcels delivered into mainline receivers and distributors.


North African receivers have booked a cargo from the Baltic for two grades of Group I base oils, and along with further enquiries for Morocco and Egypt from Italian suppliers, this trade seems to be adapting to life after Samir. SN150 prices are estimated to be at around $525/t, and SN500 at about $585/t basis CIF.

South African receivers have confirmed another large, 6,000-ton parcel moving into Durban from a U.K. refinery. This is another supply following on from similar parcels already discharged into storage in South Africa.

Theres reportedly one enquiry for Baltic supply and one clean fixture for West Africa with a multi-destination discharge program. The 12,000-ton cargo, covering receivers in Conakry, Abidjan and Apapa, has been fixed out of the U.K. and Antwerp-Rotterdam-Amsterdam, although it is not clear as to how the financial aspects of this cargo will be handled due to Nigerian banks still finding it almost impossible to get access to foreign currency.

The same applies to the Baltic enquiry for around 5,000 tons which is to load on a prompt basis for Nigerian receivers.

Nigerian sources confirmed that traders selling into the market on an open credit basis are loading prices and are selling at $50/t-$100 higher than prices noted below, because they are willing to take the risk on payments coming out of Nigeria at some future date.

Group I base oils being offered for secure payment terms into Nigeria are assessed CIF/CFR at $595/t for small quantities of SN150 in bulk, or in flexies at around $668/t. SN500 is pitched at $665/t-$680/t, with bright stock ex Europe or U.S. offered at around $985/t, and Russian SN900 now contained in offers at $775/t CIF/CFR.

European rerefined SN150 is offered CIF at around $525/t, but U.K. suppliers have decreed that deliveries will only be confirmed on basis of payment guarantee arrangements.

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

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