EMEA Base Oil Price Report


Markets were quiet this week as many players were bound for London for this weeks ICIS base oils conference and I.P. Week, which is being held there next week.

Prices for crude oil and feedstocks moved little the past few days. Dated deliveries of Brent crude continue to waver in a narrow range and posted yesterday around $55.90 per barrel for April front month settlement, a dollar higher than seven days earlier. West Texas Intermediate was $53.10/bbl, still for the latter part of March. ICE gas oil echoed the small upward movement in crude, rising to $495 per metric ton, again for March settlement.


FOB prices within Europe for API Group I were mixed, with supply of light grades remaining tight. SN100 and SN150 are still around last week’s levels at $585/t-$610/t, while SN500 and SN600 dipped to $610/t-$635/t, perhaps due to a combination of plentiful availability and lower demand.

Interestingly, an arbitrage appears to have opened between Europe and the Far East, with reports of a couple very large cargoes moving to Singapore for intra-company trade. One source attributed these movements to specific demand in that region, arguing that an arbitrage has not fully opened.

Buyers looking for bright stock have multiple supply options as refiners compete to move large volumes to export destinations. Some exceptionally low numbers were discussed regarding supplies of this grade over the past couple of weeks, including one case reportedly some $100 below market levels, but these reports have been largely discounted. Instead, purchases and offers have been witnessed at $775/t-$820/t, although one buyer claimed to have done $30/t-$50/t better.

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

There were no startling revelations this week in local markets throughout Europe, with sellers and buyers apparently content with rates being charged. The price differential between exports and local sales narrowed in recent weeks as domestic buyers gained more access to export prices. The increasing influx of Russian Group I exports has also had a moderating effect. The differential between domestic prices and export levels is now 45/t-70/t depending on grade.

Prices for Group II imports rose again the past week following markups in source markets during January. Overall European prices have risen $40/t-$60/t, which has pushed FCA or ex-tank prices upwards by some 40/t-50/t. Light grades delivered in bulk into supply hubs are now reckoned at $695/t-$720/t, while heavier grades are $775/t-$820/t, basis CIF. Ex-tank sales incur storage and handling premiums of $35/t-$50/t (30/t-45) and volumes delivered by barge or truck also pick up transportation charges.

An operating disruption at the giant Pearl gas-to-liquids base oil plant in Ras Laffan, Qatar is a hot source of rumors this week. Shell, a joint venture partner in the facility with Qatar Petroleum, announced in December that production had been hamstrung by equipment problems, but the scope of the problem has not been disclosed. Shell takes most of the output to blend its own products, and it may have to turn to other sources, such as Group III plants in Bahrain or United Arab Emirates. The picture remains indistinct, but with the mere suggestion that supply could tighten has stirred talk that prices could rise.

Producers were already trying to push up prices, but for the moment they are unchanged: $645/t-$655/t for 4 centiStoke and 6 cSt oils with partial OEM approvals, FCA Northwestern Europe; $695/t-$720/t for the same grade of fully approved oils, FCA Antwerp-Rotterdam-Amsterdam; and $675/t for fully approved 8 cSt, CIF cargoes delivered into major receivers of Group III base oils may be around $55/t-$80/t lower than FCA sales.

Baltic and Black Seas

A large volume – some 25,000 tons to 30,000 tons – of Group I oils have come out of the Baltic, programmed to be delivered during first half of February to Northwestern Europe or the United Kingdom. This has happened despite cutbacks in availabilities due to maintenance at Gazproms plant in Omsk, Russia. Confirmation could come this week of larger parcels being negotiated for West Africa, particularly Nigeria, since a number of major Nigerian receivers will attend the London conferences.

Even with the large volumes coming out of the Baltic, many distributors and resellers describe limited availabilities of exported material. In this market, the longer universal pricing remains flat or stable, the more pressure comes to bear on Russian exports, and with this factor in mind, FOB prices have dipped the past ten days to $510/t-$545/t for SN150, $545/t-$575/t for SN500, and $685/t-$710/t for bulk volumes of SN900, FOB.

Black Sea trading has resumed in spite of ice warnings around the Sea of Azov, including an unusual loading of 7,000 tons ex-Kavkaz, Russia, destined for Rotterdam. With prices of SN150 low in the Black Sea, and apparently no shortage of availability, this could be an opportunistic cargo primed by low FOB rates and scarcity of this grade in Northwestern Europe.

SN150 has been discounted to move out of floating storage and levels around $455/t are available with prompt lifting. SN500 is being offered at $590/t-$625/t, basis STS Kavkaz, including a loading destined for Israel.

Two large parcels of Group I exports from Greece arrived into Derince, Turkey, prices at $568/t-$579/t for SN150 and $628/t-$645/t, CIF.

Red Sea traffic was reportedly quiet this week with no new inquiries for receivers in this area and few shipping inquiries for vessels loading out of Yanbual Bahr and Jeddah, Saudi Arabia. A cargo for Aqaba, Jordan, appears to have been shelved for the moment, although sources said this requirement may have been covered privately and confidentially.

Middle East Gulf

Aside from the situation in Ras Laffan, the biggest news in the Middle East is the growing volume of Group I SN500 being shipped from Bandar Bushehr, Iran, to Mumbai, Jakarta, Port Klang, Malaysia, and Karachi. Information from U.A.E. sources has helped refine estimates of prices for this material. Netting back costs against known freight rates yields FOB prices around $595/t. No further comments have been received regarding availability of SN150, which was quoted last week at $600/t, ex-tank U.A.E.

Prices ex-U.A.E. for Iranian SN500 are assessed at $625/t FCA or $615/t FOB.

Almost all U.S. Gulf Coast offers for Group I material appear to have been taken up by Indian buyers, leaving Middle East Gulf receivers out of the equation. Some sources in the U.A.E. said that by diverting Group I material into India they can produce finished lubricants at lower cost. Contract barrels of Group I grades ex-Red Sea into receivers in Oman and Fujairah, U.A.E., are assessed lower this week, landing around $610/t for SN150, $655/t for SN500, and $855/t for bright stock, all CIF/CFR.

The problems at Pearl have stirred rumors that barrels from Bahrain, Al Ruwais or Abu Dhabi, U.A.E., could be used to cover any shortage. It is unclear, though whether these sources could be good substitutes since oils from Al Ruwais dont yet have a full range of OEM approvals and since all three plants use vacuum gas oil feedstock rather than natural gas. Prolonged disruption at Pearl could create upward pressure on prices, and some of that may already exist because of maintenance turnarounds at Far East plants.

Group II trade remains thin throughout Middle East Gulf regions, and prices are unchanged: $610/t-$635/t for light grades; $765/t-$795/t for 500N; and $810/t-$830/t for 600N, CIF Middle East Gulf. Smaller parcels carry premiums of $45/t-$90/t depending on size, delivery mode and distance from U.A.E. storage hub.


There was no news in trade for East and South Africa this week, with shipping agents in Durban, South Africa, awaiting large parcels from the U.K. and Northwestern Europe. Cargoes from Northwestern European suppliers are headed for West African markets other than Nigeria, and another parcel as been loaded out of the U.K. for Nigerian receivers.

In addition to these movements, a large parcel of around 12,000 tons to 13,000 tons is arranged into Lagos for buyers who have figured a way around the countrys foreign exchange problems. Nigerian buyers said they want to move promptly on purchases, concerned that crude prices may rise because of production cutbacks by OPEC and other oil producing countries.

Nigerian buyers face other problems, too, such as difficulty assembling large parcels that would allow economies of scale, and their persistent search for lower prices than can be achieved elsewhere. With lower availabilities for Group I grades, producers are beginning to be able to cherry-pick where and when they place their supply.

Prices for sales into Nigeria are now assessed at $585/t-$685/t for Group I solvent neutrals, and $870/t-$895/t for bright stock from the U.S. or Europe. SN900 ex-Baltic will be around $775/t-$795/t. These prices are basis CFR/CIF Apapa port, 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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