EMEA Base Oil Price Report


Base oil markets reignited this week with a flurry of trade reports suggesting demand is back for all types of base oil and that buyers have surrendered the idea that prices were due to come off. Sellers renewed attempts to push prices higher, and most offers seen or heard this week reflected higher numbers than previously.

After Saudi Arabia and Russia agreed in Beijing to extend crude production cuts through March of 2018, it will only require a mandate from the other OPEC members to ensure that current restrictions are at least maintained. OPEC is scheduled to meet later this month and is expected to ratify the extension then.

Crude oil and feedstock prices rose after the agreement in Beijing, although they retreated slightly yesterday to values around $3 per barrel higher than last week. Dated deliveries of Brent crude showed at $51.55/bbl yesterday, for front month July settlement, while West Texas Intermediate was at $48.55/bbl, still for June front month. LS Gas Oil rallied some $22 to $455 per metric ton.

Buoyed by crude and feedstock movements, base oil sellers have seized the opportunity to hike offer prices this week, with the trend most evident in API Group I spot offers. Contract supplies of all base stock groups are now under review, and upward pricing pressure is apparent.

Prices for light solvent neutrals have risen some $10/t-$15/t, and now are assessed between $640/t-$685/t, while SN500 and SN600 are up to $730/t-$780/t. Availabilities appear to have tightened, perhaps because of maintenance turnarounds underway at a number of plants, but as one observer commented this week, plant closings have reduced the Group I supply base in mainland Europe, and Russian exports has only partly offset the loss.

Bright stock appears to be in demand this week, with a number of inquiries for large parcels hitting the market. Offered levels rose, and prices are now assessed at $820/t-$855/t.

The prices above refer to larger parcels of Group I base oils supplied or offered FOB ex-mainland European supply points.

Prices for local sales within Europe appear unchanged, with increases perhaps delayed by the monthly schedule for reviewing prices. If the export prices stick or rise further, then domestic levels will most certainly follow. Sellers seem relaxed about market share since availability of most Group I grades is relatively tight.

Mainland Europe, along with the United Kingdom and Scandinavia, reports brisk offtake as many buyers look to purchase forward to protect supplies into the next quarter. Many prices have reverted to being linked to indices based on pricing publications. Also the incidence of spot buying appears to have dwindled this week, with more buyers looking to shore up supplies for the next couple of months.

The differential between local FCA or ex-tank prices and spot export sales decreased this week and is now assessed between 55/t-95/t.

Prices for Group II oils imported to Europe reportedly have already been adjusted to account for previous hikes in source markets, so no additional markups were anticipated in Europe when this column was written. Of course that could change if crude and feedstock costs take off. Group II marketers are closely watching their own costs as well as the progress of Group I grades. Demand remains healthy, with more new customers purchasing Group IIs while blenders that have been using them increase their offtake. That is good news for ExxonMobil and the Group II plant it plans to open in Rotterdam next year.

Group II prices are steady this week – $715/t-$740/t for 100 neutral and 200N and $825/t-$845/t for 500N and 600N, all CIF Antwerp-Rotterdam-Amsterdam. FCA prices are 710/t-730/t for the light grades and 855/t-880/t for heavies.

Group III prices in Europe are maintained this week since there were no reports of major movements. Four centiStoke oils are assessed at $810/t-$840/t (740/t-770/t), while 6 cSt remains $840/t-$865/t (770/t-795/t), FCA northwestern Europe. Oils with full slates of finished lubricant approvals are 810/t-845/t for 4 cSt and 6 cSt grades and 790/t for 8 cSt where available, all on an FCA basis Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Baltic FOB prices followed the Group I trend in Europe, appearing to firm slightly, although reported business is thin this week with only a couple of short-sea trade cargoes loading for Rotterdam. Likewise there are few inquiries being handled at the moment, as some traders and buyers claimed that freight rates from the Baltic had risen in relation to mainstream European loadings. Availability remains snug, and not all combinations of cargo can be arranged. Some distributors or resellers are short on one or another grade, pushing traders to look at shipments with two or even three port loadings, which only adds to overall costs.

SN150 is assessed at $585/t-$610/t, SN500 at $665/t-$695/t and SN900 at $790/t-$810/t, all reflecting increases at the low end of their ranges. A large number of inquiries have been fielded for SN900 – with some traders looking for upwards of 5,000 tons to move to deep-sea markets – but few sellers can satisfy them.

Turkish importers remain focused on a raft of Group I and Group III cargoes coming in from Mediterranean sources. The ports of Gebze and Derince, Turkey, have seen multiple shipments almost on a weekly basis. Prices are estimated to have moved slightly upwards over the past week or so, to $725/t-$740/t and $765/t-$785/t, respectively for SN150 and SN600.

Russian parcels are still being offered out of Kavkaz, Russia, although there has been no further news of mega-cargoes that have been the main traffic from this region to the United Arab Emirates, the West Coast of India and Singapore. There are rumors this week of a reverse transaction taking place with an inquiry for a 5,000 ton parcel of Iranian base oil to load during second half May. Quite how this works is unknown unless perhaps the material is rubber process oil or a base oil of lower specification that can be priced low.

Middle East Gulf

Red Sea receivers in Aqaba, Jordan, are still in the market for around 3,000 to 4,000 tons of Group I oils, and a number of sources are being tapped for offers. Offers are heard from Saudi Arabia and from traders figuring on supply from Mediterranean sources in places such as Greece or Italy. The Sudanese requirement cited previously appears to have been covered, possibly by the incumbent suppliers.

Base oil trade in the Middle East Gulf has become primarily an export business and a fluid one with ongoing developments such as a marketing realignment for the Neste-Bapco joint venture in Bahrain the resumption of production at the Pearl gas-to-liquids plant in Qatar. Movements from Adnocs plant in Al Ruwais, U.A.E., are not so evident, perhaps due to maintenance work at that site, although one shipment of some 12,000 tons was reported going into the West Coast of India for a number of receivers.

The looming onset of Ramadan has many players trying to organize sales and reception of base oils before the end of this month. The early timing for the Holy Month may affect trade within the region, and it is anticipated that there will be a general lull during this period.

With only one open inquiry for exports of Iranian base oils – a 5,000 ton parcel for Turkey – there are few shipments coming out of southern Iranian ports. Notable imports, however, include parcels of Group III shipped from Malaysia into Bandar-e Emam Khomeyni, probably stemming from a recent agreement between Iranol and Malaysias Petronas to produce finished lubes in Iran.

FOB prices for Group III produced around the Middle East Gulf are still assessed at $680/t-$710/t for 4 cSt and 6 cSt grades, while 8 cSt may be priced around $660/t-$675/t. These estimates are made on a netback basis, using nominal freight and margin costs for a combination of cargoes being delivered to Europe, the West Coast of India and the Far East.

Bulk imports of Group II into U.A.E. storage from United States majors are being offered FCA at $695/t-$725/t for light grades and $895/t-$925/t for heavy grades.


Reports of cross-Mediterranean traffic describe material being delivered into Israel and Egypt, in addition to Group I supplies into Algeria, Tunisia and Morocco. There are also inquiries for Baltic material in bulk and in flexitanks to be delivered into various sites in North Africa, the flexies being reportedly for onward supply to small blending operations in Chad and Mali.

West Africa remains very subdued this week, although one cargo supplied by a major oil company was identified. This parcel appears to be a replica of another that has already loaded out of Spain and the U.K., and which is now on the water. There are no inquiries or offers for material loading out of the U.S. Gulf or East coasts, as traders seem to be offering Group I cargoes to receivers in India. There are other inquiries for Baltic supplies, but problems loading an ideal combination of oils from this region mean it may be some time before supplies can be arranged. The inquiry for 6,000 tons each of SN150 and SN500 remains uncovered due to difficulty supplying these quantities and to price ideas held by Nigerian receivers.

Smaller cargoes are being arranged for delivery during June and July into Guinea, Ivory Coast and Ghana.

Offers are few and far between these days. Those that exist are for Group I oils from the Baltic, with SN150 at $735/t, SN500 at $798/t and SN900 at $915/t. Bright stock ex-Baltic is now assessed at $968/t, all CIF/CFR Apapa port, Lagos, Nigeria.

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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