EMEA Base Oil Price Report


Following the ICIS World Base Oils and Lubricants Conference in London last week, industry views appear to be united regarding the parlous state of the base oil supply scene.

With crude oil prices potentially reaching a nadir, most agree that base oil levels may start to plateau. Many said they would be more than pleased to have stability, irrespective of actual levels. This would give some definition to finished lube prices, which would enable blenders to purchase larger quantities of raw materials.

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In response to the actual conference, prices have not changed much, with only a few sellers suggesting that they were willing to lower prices to meet buying expectations. Most were keen to preserve current values, perhaps expecting a degree of slight erosion to these numbers over the next few weeks. Many enquiries were floated during the proceedings, and only after offers are produced this week will notable alterations take effect.

ICE dated deliveries of Brent crude levels peaked above $35 per barrel at the end of last week, but subsequently subsided to around $33.80 per bbl for April front month settlement, with West Texas Intermediate crude at $31.80 per bbl. Pundits believe crude will continue responding to various geopolitical events in short spikes, then reverting back to reflect supply/demand. ICE LS gas oil has followed form to just above $300 per metric ton in March front month trade.


European FOB prices for API Group I base oils were steady, with light solvent neutrals at $410/t-$445/t. Due to continuing demand, heavier neutrals were $475/t-$510/t in completed deals.

Bright stock continues to show strength, with offers of $830/t-$855/t – perhaps the only substantiated upward price movement this week. Privately sellers have commented that bright stock is holding the largest premium to SN500 possible, and that further erosion to heavy solvent neutrals may result in downward bright stock prices, irrespective of positive demand.

The prices above refer to large export parcels of Group I grades offered or sold on an FOB basis ex mainstream producers located within Europe.

Local prices for Group I products are also maintained, at 45/t-60/t higher than export levels. Many suppliers confirmed that they are regularly reviewing prices against FOB export levels, taking account of incremental costs associated with domestic sales. Others claimed that prices in export and domestic markets have eclipsed and that only one market exists with variable costs associated with supply. The situation of Baltic exports is cited, with buyers now cognizant of refinery gate prices, rail transport, Baltic storage costs, and finally shipping rates and receiving costs into mainland Europe and the United Kingdom.

Prices for Group II being resold within Europe vary widely and it is felt that these prices must be defined to reflect accurate selling levels. Prices for approved and non-approved products are often being quoted in trucks whilst others are FCA, and others are on a delivered basis. Delivery charges and costs can be extensive and variable, hence all prices referred to in this report will be on the basis of ex-tank Antwerp-Rotterdam-Amsterdam.

Group II levels have stabilized over the past few weeks, even with further source discounting. U.S. producers in particular have reported further cuts to posted prices and whilst these are not directly related to imported products and associated costs, buyers will latch on to any scrap of information which will help in negotiations.

The lighter vis range is $445/t-$535/t, with the low referring to non-approved material. Higher viscosity grades such as 500N and 600N are $610/t-$650/t. Delivered prices can be up to 75/t depending on supply and destination.

Group III suppliers expressed confidence that the potential European oversupply will be temporary, with demand accelerating in the next 5-10 years. Some importers say prices are too low, whist other European producers appear to be prepared to accept current levels with accompanying market share. Last week, sources confirmed that they do not perceive any further expansion to Group III production in Europe, other than smaller conversion units.

Prices have varied over the past few weeks, with some producers showing numbers that others deny. Levels for 4 centiStoke and 6 cSt have been established and maintained at 835/t-860/t ex tank Antwerp-Rotterdam-Amsterdam.

Baltic and Black Sea

Baltic trade shows deep-sea exports to regions such as West Africa, and an extension of cargoes into northwestern Europe. The former is under severe pressure: Nigeria has reached a critical point in not being able to access U.S. dollars to allow the issuance of letters of credit from Nigerian banks. This is preventing normal sales of large parcels of Russian exports, and whilst mainland European prices remain higher than Baltic exports, more and more material is being aimed at Europe.

Prices for SN150 and SN500 are $380/t-$420/t and $445/t-$465/t, respectively, with SN500 $10/t higher than last week. Sensing that deep-sea exports may not be forthcoming, buyers are countering $20/t-$30/t downwards. There have been a number of movements from Liepaja and Riga, Lativa; Svetly, Russia; and also from Poland, where prices are more inline with mainstream European exports.

SN900 is available for loading in late February, but without guarantees of payments from receivers in Nigeria, and interest from U.S. and Central America, it may be offered elsewhere. FCA levels have been quoted at sub-$500/t, bringing FOB levels to around this level.

Black Sea trade into Turkey remains brisk, with offers for both Russian export barrels and Group I material from Greece, Italy and now Israel. Parcels of SN150 and SN500 have been going into Gebze and Diliskelesi, Turkey, from Mediterranean sources at $463/t-$518/t, and from Batumi, Georgia, at $435/t-$485/t.

SN900 is being offered out of Port Kavkaz, Russia, for Middle East Gulf receivers and is thought to be priced very competitively at around $490 STS. This material could go into a number of blending operations in United Arab Emirates as a high vis Group I blend stock to be used either as an alternative to bright stock or in a blend, which can minimize the higher-priced bright stock being utilized. Delivered prices in offers are around $650/t CFR.

Turkmen grades are also back on the Black Sea market, but quantities of SN180 and SN350 are too highly priced to figure as potential imports for Turkey at this time. Also, quality is limited due to the viscosity range. Traditionally, Turkmen exports would find a home in Iran, but Iranian exporters are also investigating Group I imports into Turkey with a couple of shipping enquiries in the market for parcels of 3,000-5,000 tons of SN500 being floated.

Middle East Gulf

Middle East Gulf base oil markets are being struck by a similar problem to that of Nigeria, with a number of banks pulling up the drawbridge on providing funds for some traders and purchasers of imported base oils. The cause is quite different, though: many local banks are protecting themselves by reviewing credit lines and limits, thus stalling trade.

Certain traders have turned to exchange sources in Europe to provide funding, but vetting of these organizations has been difficult due to lack of clarity of some accounting records, according to sources. Iranian exporters appear to have started trading directly with end-receivers in the west coast of India, Far East, East Africa and Turkey.

Prices confirmed for Iranian exports of SN500 have steadied at $425/t FOB and $445 CFR United Arab Emirates. SN150 from alternative Iranian sources was heard at around $420/t FOB Bandar Bushehr.

Saudi barrels are flowing again from the Red Sea to receivers in Oman and U.A.E. with prices nominally estimated to be $470/t-$530/t in respect of the Group I solvent neutrals.

Group II trade has subsided, perhaps as an effect of Far East suppliers paying more attention to markets in China after the Lunar New Year, and the onset of spring for finished lube markets. However, a number of buyers are looking to purchase significant quantities of Group II base oils and are taking steps to invite offers from Far East and U.S. suppliers for large quantities to arrive during April. Target prices are $465/t-$470/t in respect of 150N in small quantities and $550/t-$570/t for heavier 500N or 600N material.


North African receivers have sourced a number of European cargoes, some from unlikely supply points such as one parcel of 3,000 tons loading in Gdansk, Poland, for Tunisian buyers. Other reports are for material from Italy moving into Morocco. Quantities of Group I base oils are also being imported into Egypt from Spain and Italy. Prices are $475/t-$490/t for SN150 and $510/t-$520/t for SN500 loading along with bright stock between $885/t and $920/t CFR or CIF.

The Nigerian problem apparently stems from lack of revenue generated from lower-priced crude exports. The markets for imported petroleum products such as mogas, kero and diesel are also affected and these products will possibly take precedence over imports of base oils.

Some traders have taken open positions regarding supplies of base oils and other petroleum products into Nigeria, perhaps using alternative means of receiving payment. A large cargo of some 15,000 tons of base oils has been booked to load out of the U.S. Gulf Coast, purportedly for a major, for discharging into Onne, Nigeria. This cargo may be for affiliate trade and payment can be effected through internal systems.

More routine trades have been halted with current vessels remaining on subjects until clarification regarding payment can be established. Progress is slow, with the Central Bank seeking government guidance. Cargoes already purchased and covered by confirmed letters of credit will not be affected, and prices for these cargoes can be reported with indications of $465/t-$518/t in respect of SN150 and SN500/600, along with bright stock at $876/t. SN900 is no longer being offered into Nigeria.

On a more positive note, the annual tender for the supply of base oils into Tema, Ghana, closed last week and the outcome will be announced shortly. Other receivers in Guinea and Cote d’Ivoire are looking to take smaller parcels in bulk into storage during March, and importers in Gabon have already purchased some 3,000 tons of Group I grades for the local market.

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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