Europe-MidEast-Africa Base Oil Price Report


Its been a week of mixed emotions, with very different attitudes adopted by sellers and buyers in response to a market which appears to be marking time.

Suppliers are not united. Some have decided to try to increase prices, albeit by small amounts, whilst others are relaxed enough to leave prices as they are. Others appear to be intent on moving inventory, and in certain cases are contemplating price reductions to move material prior to year end 2009. Some are even stating that they might cut production to reflect the lacklustre demand.

This makes reading the market exceptionally difficult, and buyers seem to be doing the rounds to see which refiners are flexible enough to lower current price levels with the attraction of prompt sales. This has encouraged a large number of enquiries from potential bargain hunters, who are perhaps used to year-end sales at discounted rates from sellers who are trying to achieve satisfactory inventory status.

This year inventories are not overly high, since poor demand has kept production down.

Numbers therefore are unchanged, with small adjustments possible at each end of the pricing ranges. There is no clear movement in spite of all that goes on around base oil, with wide feedstock fluctuations and crude rocking backwards and forwards between $75 and $80 per barrel. Dated Brent, WTI and Nymex are all showing in the mid range of this band, and appear to have found a certain stability around these levels.

Low sulphur vacuum gas oil is trading at about $4.50 per barrel over ICE January Brent, showing year-end strength, but this feedstock is subject to large daily fluctuations of as much as $15 to $25 per metric ton.

In Europe, base oil prices are in the range of $785 to $845/t, basis FOB mainland European ports, for API Group I solvent neutrals. Bright stock is around $925 to $965/t for cargo-sized lots. Some sellers in the Mediterranean are touting prices for heavy neutrals which would create a premium over these levels, whereas producers in Northwest Europe and the Baltic are struggling to achieve these levels across their portfolio.

To finalise sales of cargoes out of the Baltic loading ports, Russian prices have been under some pressure. Prices as low as $735/t, basis FOB, have been heard this week for SAE 30 (SN 500 equivalent). Overall, though, most of the material coming through the Baltic has been allocated and is moving, with just a few parcels still awaiting ownership.

In the Black Sea there appears to be a stand-off between sellers and potential buyers with little movement, and with many availabilities awaiting offers to complete any deals. Perhaps due to higher transport and storage costs, and more difficult shipping, these parcels of Russian, Belarus, and Uzbek base oils should command higher numbers than Baltic material, but still remain unsold at current offered levels between $765 and $790/t, basis FOB Black Sea load ports, for multiple viscosity grades between SN 100 up to SN 650.

In the Middle East Gulf region most producers are reporting a serious lack of demand from buyers. However, this region is not isolated, and is dependent on external markets such as India and East Africa to off-take supplies of base oils and finished lubes. When these markets are dull then this can affect the overall Middle East Gulf marketplace.

For example, Iranian base stocks have remained static in pricing for the last few weeks despite efforts from refiners to move numbers up into line with production costs. Prices are still in the region of $785 to $810/t, basis Bander Abbas or Bander Bushire, for Group I SN 150 and SN 500. There is still no clarity as to the effects on prices for base oils of any subsidies being withdrawn by the Iranian government.

Group II/II+ price levels throughout Europe and the Middle East Gulf areas have remained unchanged over the last week, with continued talks of increases from the production units in the United States and the Far East, but with no decisive movements as yet from these refiners. Prices are still in the broad ranges of $875 to $995/t, with a few small deliveries of Group II+ material priced slightly above $1,010/t, basis delivered ex tank Benelux.

Group III levels maintain the same prices as before, but once again there have been reports of heavily discounted sales in the Mediterranean region for lower vis Group III grades. Given these rumours, prices could still fall in the broad spectrum of $875 to $1,150/t for the full portfolio of Group III base oils. With some producers only selling lower vis material, this price range should be adjusted accordingly; the upper end of the range applies only to the higher vis grades where available.

North Africa remains quiet, with some imports arriving from the Baltic into Morocco, where basic Group I material can be economically utilised to supplement the locally produced better quality hydrofinished base oils. Other producers in the North African area, in Algeria and Egypt, have sold all their reduced production and have very little export material to offer to the market.

The market in West Africa remains stagnant with only one reported cargo of base oils moving into Nigeria. It could be assumed that demand has also tailed off, since this would be the time for bargain basement cargoes of heavy neutrals and bright stock making their way into the region. Prices for a cargo are estimated to be $880 to $895/t for the heavy neutral grade, and $1,030/t for bright stock. These lower levels are perhaps due to lower freight costs for larger cargo sizes, or a composite cargo being attractive to refiners on an FOB basis.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Contact him directly at

U.S. posted paraffinic base oil prices, as reported each week in Lube Report from Jan. 2004 to the present, are now available in Excel format. See

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