Europe

Offered prices for spot export sales of API Group I oils in Europe were largely unchanged this week as sellers looked to hold their ground in the midst of slightly greater availability. The only upward moves were for larger parcels of light solvent neutrals, which are both scarce and also in demand. Buyers appear content to purchase at current prices, acknowledging that base oils may still face some upward pressure given that feedstock costs have risen around 14 percent the past six weeks.

Price for light solvent neutrals are tweaked marginally higher this week to $695/t-$725/t, reflecting the availability situation for larger quantities of these grades. In fact, demand is great enough that prices in the low end of this spread may be only achievable by a few sellers. Solvent neutral 500 and SN600 are easier in price terms and are trading between $765/t and $790/t.

Bright stock is still in demand – particularly for parcels to be shipped into deep-sea locations such as West Africa – but greater availability appears to lowered offers to $835/t-$865/t. These prices refer to large cargo-sized parcels of Group I base oils supplied or offered FOB from mainland European supply points.

Prices for Group I sales within Europe were unchanged as market sources explained that neither buyers nor sellers sought to move them from levels established around the turn of the month. FCA or ex-tank prices remain in the same ballpark as the last couple of weeks, with few upward or downward pressures being brought to bear.

Demand is steady in most markets, but some weak trading is noted in some pockets around the Mediterranean; here contracted volumes are down from last year, and sellers feel compelled to boost spot and contract sales. Finished lubricant demand is forecast to remain lackluster for the next three to four months, so the situation for sellers may not improve until the first quarter of 2018.

The differential between FCA prices for Group I sales within Europe and export levels is unchanged and is assessed at 55/t-75/t.

Group II markets seem to be something of an enigma within Europe. Two of the major importers of these grades are still invoking force majeure in the United States, so one might have expected the Group II market in Europe to tighten.

There are no reports of constraints in this segment, however, and buyers seem satisfied that suppliers will manage events to cover any potential shortfall. One might also have expected the disruption to result in price hikes, especially since most U.S. Group II producers announced markups in their home market of $30/t-$35/t. To date, though, prices in Europe seem unaffected.

Values for light-vis grades are $660/t-$685/t, while 500N and 600N are $775/t-$815/t landed CIF in bulk cargoes into Antwerp-Rotterdam-Amsterdam. Resultant FCA prices will be around 755/t-790/t for light grades and 855/t-890/t for heavies.

Group III prices remain largely unchanged this week, but as suggested last week some players have commented that there could be a shift to use more 6 centiStoke material than 4 cSt. This may have led to prices for the former grade rising above the latter; 4 cSt is now priced at $775/t-$795/t, while 6 cSt material is $785/t-$815/t.

Local euro sales for both grades are banded between 685/t-705/t, basis FCA Northwestern Europe. Group III oils with full slates of finished lubricant approvals, offered FCA Antwerp-Rotterdam-Amsterdam, will be 780/t-815/t for 4 cSt, 785/t-820/t for 6 cSt and 755/t-775/t for 8 cSt. These prices refer to local FCA sales rather than parcels being delivered in bulk to major receivers and distributors, which may be $75/t-$100/t lower.

Baltic and Black Seas

Baltic base oil prices remain largely in line with European mainstream levels, and with a steady number of inquiries for both deep-sea exports and more localized sales into Antwerp-Rotterdam-Amsterdam and the United Kingdom, trade is reported as brisk this week. There are a couple of large inquiries for cargoes of 10,000 to 15,000 tons to load for Nigeria but also a few smaller parcels of around 6,000 tons each to be delivered to the same destination.

Prices for Russian export barrels on an FOB basis are maintained at $695/t-$725/t for SN150, $765/t-$780/t for SN500, $865/t-$880/t for SN900, and $895/t-$945/t for bright stock from southern Baltic sources, and from Russian producers.

In the Black Sea, SN500 from Volgograd, Russia, is assessed at around $785/t-$825/t, basis CIF, higher than expected last week due to prices for smaller quantities being delivered on river vessels coming out at much higher levels than those numbers seen for STS loadings out of Kavkaz, Russia. A number of Mediterranean cargoes are once again moving into receivers based in western Turkey ports such as Derince. One cargo out of Greece is discharging into Gebze, Turkey, at prices assessed at $750/t-$775/t for SN150 and $795/t-$825/t for SN600, basis CIF. Bulk parcels of 4 cSt and 6 cSt Group III ex-Cartagena, Spain, are said by local sources in Turkeys Marmara region to be priced at $785/t-$800/t, delivered CIF Gebze and Aliaga, Turkey.

Middle East Gulf

Sources in the Red Sea claim the requirement for Aqaba, Jordan, has been covered by Red Sea suppliers, but the accuracy of those reports is uncertain. This news is denied by traders who have been trying to take this business using Med supply options, and other traders in United Arab Emirates also claim to be in the brink of completing this deal. Saudi Arabian suppliers are loading parcels for the usual run into Oman and the U.A.E.

In Middle East Gulf regions there is news that prices for Iranian exports of premium SN500 have risen again – to $755/t-$765/t, basis FOB Bandar-e Emam Khomeyni. This markup brings these grades into line with European and other Middle East Gulf FOB levels for prime Group I material. These prices are assessed based on delivered levels being reported from receivers in Mumbai anchorage and Karachi, Pakistan.

Large quantities of Group III exports continue to be reported loading out of Sitra, Bahrain, and Al Ruwais, U.A.E., discharging into the West Coast of India, Europe and the U.S. Using delivered prices in those regions, it is possible to establish FOB numbers for these grades, and values are raised slightly this week as a result of higher landed prices into Mumbai.

Four and 6 cSt oils from Al Ruwais are loading for around $675/t-$695/t. Sitra material achieves slightly higher values due to full slates of finished lube approvals, around $725/t for 4 cSt and 6 cSt material and $715/t-$725/t for 8 cSt. These estimates refer to CIF material in large cargoes sold to major buyers and appointed distributors.

Near record quantities of base oils are reportedly arriving into the Middle East Gulf from South Korea. Given that Group III grades are freely available from sources within the region, the assumption is that these Korean imports refer to Group II base stocks. Prices are assessed at $640/t-$655/t for light-vis cuts, with 500N coming in lower than expected, at around $835/t-$860/t CIF Middle East Gulf ports, perhaps due to prices falling at the point of origin.

Group II material imported from Far East and U.S. sources are still available out of storage in the U.A.E. on an FCA or truck delivered basis. Levels are slightly lower at $785/t-$845/t for 100N, 150N and 220N and $855/t-$925/t for 500N and 600N, CIF Middle East Gulf locations. Prices are dependent on delivery location, distance and mode of supply.

Africa

Market sources describe cargoes moving into Morocco and Algeria, and one shipment is reported loading out of the Baltic and discharging into Tunisia and Algeria. Other more routine contracted cargoes are moving into Egypt to service the EGPC contract.

West Africa receivers for base oil outside Nigeria report new inquiries for material to discharge into Guinea and Ivory Coast during November. Whether these parcels will be delivered as stand-alone cargoes or as part of a larger movement to include Nigeria remains to be seen. Further confirmation has been received of the large U.S. Gulf Coast cargo that had loaded at the beginning of the month and is now en route for Apapa. Agents confirm the arrival around October 20-25, WSNP.

Prices delivered into Nigeria remain unaltered for the latter shipment, very keen since they were negotiated before Hurricane Harvey. CIF/CFR prices for light neutrals are assessed at $745/t-$765/t, while heavier grades are around $825/t. Bright stock should be priced at $930/t-$955/t. Prices for oils shipped from the Baltic are reviewed this week and are re-assessed at $855/t-$870/t for SN150, $895/t for SN500, $985/t-$995/t for SN900 and $1,025/t-$1,055/t for bright stock.

All prices for Nigeria are for Group I base oils delivered CIF/CFR to Apapa, Lagos or Port Harcourt.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly atpumacrown@email.com.