Whilst over the last three to four months sellers have been desperate to move barrels at almost any cost without success, now they are playing hard to get, and are stubbornly maintaining their positions regarding prices. Bid levels below $350 per metric ton for Group I neutrals have been taken as tongue-in-cheek by producers. One offer at $320/t FOB Baltic, for two parcels of SN 150 and SN 500, was summarily dismissed as derisory.
Get alerts when new Sustainability Blog articles are available.
The pricing for this method of supply can, in many cases, be more efficient than talking cargo-size parcels and using a break-bulk operation to supply many smaller receivers. For example, European Group I solvent neutrals can be delivered CIF to the locations above at prices in the range of $550 to $650/t. This is a more economic option than having to purchase local supplies of Group I or Group II/III material whose prices can be in excess of $700/t delivered.
The activity at last weeks I.P. meetings and the ICIS base oil conference in particular may have focused many players minds on the current situation in the region, and may indeed have promoted some of the discussions regarding how fast prices have fallen, and how far these levels still may fall before levelling out or even moving back up. With the sore heads and the bleary eyes forgotten, is there a now a harsh realisation that we have arrived?
Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Contact him directly at firstname.lastname@example.org.