Markets seemed unroiled by renewed United States sanctions against Iran sanctions or Turkeys economic collapse.

Europe

Prices for API Group l exports from Europe are maintained at last weeks levels with few new deals reported. Light solvent neutrals were reported at $780 to $799 per metric ton and heavier grades such as SN500 and SN600 $875/t-$910/t. Bright stock was unchanged at $925/t-$950/t.

These prices refer to large cargo-sized parcels of Group I base oils sold on an FOB basis from mainland European supply points.

Group l sales throughout Europe barely continued, with only contract sales being recorded at this time. Buyers said they expect prices to be reviewed by all parties around the end of August, though most parties agreed there is little impetus for change. Some see Group l availabilities becoming longer in the fourth quarter as more blenders look to switch to Group II.

Prices remain in a stop position currently, with few changes reported, thus the differential between local prices and export numbers remains unaltered between 50/t-75/t.

Group II availability remains relatively tight with demand growing on the introduction of new European automotive engine oil standards. ExxonMobils opening of a large Group II plant in Rotterdam could make supply long initially, some said, but others maintain that imports – which were increased ahead of that opening – will be pared to take slack out of the market.

FCA and delivered prices are maintained at current levels, the light vis grades between $875/t-$920/t (745-785), with heavier vis 500N and 600N selling at $955/t-$975/t (815/t-820/t). This market being in in a supply/demand balance is protecting Group II prices where pressures may start to be exerted on Group l number over the next few months.

Healthy demand and continuing interest for Group III base oils means that further imports and sales of locally produced material are growing with reports even during these quiet times indicating that Group III base oils are playing a large part in the development in the European market.

FCA prices are left unchanged this week after being re-assessed last time around, with levels remaining between 760/t-765/t ($875/t-$885/t) for 4 centiStoke grades, 770/t-775/t ($885/t-$890/t) for 6 cSt and 775/t-785/t ($895/t-$900/t) for 8 cSt. These prices apply to partly-approved Group lll base oils being sold out of hub storage in NW Europe, whilst material carrying full ACEA and European OEM approvals remain between 805/t-820/t for 4 cSt, 810/t-830/t for 6 cSt and 815/t-835/t for 8 cSt, all on an FCA basis Amsterdam-Rotterdam-Antwerp.

Prices are based on ex-rack or truck delivered smaller lots of Group III base oils, and do not reflect prices for material which is delivered in bulk cargoes to larger users, for example major blenders or additive manufacturers. Prices in respect of those trades may be considerably lower than levels above.

Baltic and Black Seas

Baltic sales have dipped again this week, perhaps reflecting lower demand from resellers and blenders in Amsterdam-Rotterdam-Antwerp and Northwestern Europe, whose re-stocking of Group l grades ex Baltic have probably reached the point where material has to flow out of tank again prior to any further cargoes arriving. The next couple of weeks could follow a similar pattern, only coming back to normality in September. In addition there have been no new enquiries from traders or receivers in Nigeria, which could mean that there will be a time gap for supplies out of the Baltic into West Africa.

FOB prices in respect of trades into Amsterdam-Rotterdam-Antwerp remain assessed between $725/t-$745/t for SN150 and at $785/t-$820/t for SN500.

Another large slug of Russian export base oils has been reported loading out of STS facilities ex Kavkaz, with some 12,000 tons of products being sold to receivers in Singapore. This latest cargo is in addition to the 25,000 tons announced last week, indicating the capability of the refineries to be able to re-stock and ship these quantities to the mother ship at Kavkaz.

Group l Mediterranean supplies are starting to come back again with a couple of Greek sourced cargoes going into Gebze, Turkey, but the hot news this week is of the collapse of the Turkish lira and the inherent problems of the Turkish economy. How this scenario will ultimately affect lubricant production and base oil supplies remains to be ascertained, but certainly imports of material being priced in U.S. dollars will become extremely expensive, with the resultant slow down I these transactions.

Indication prices in respect of Group l base oils are maintained for Med supplies with light solvent neutrals around $785/t-$810/t and $850/t-$885/t for SN600 and SN500, basis CIF.

Group III oils are also being reported coming into Turkey from Spanish sources, but these cargoes are much smaller than previously noted, perhaps reflecting the reduced ability to purchase dollars or euros to be able to import from this source.

Middle East Gulf

A cargo out of Jeddah port is being tested for delivery into Sudan, but no clear deal has been reported from receivers at this time. Other Red Sea news is limited his week, with only a rumor of another Group l parcel being sought for buyers in Aqaba, Jordan.

In the Middle East Gulf the escalation of the conflict in Yemen with the two main support groups Saudi Arabia and Iran on opposing sides, is heightening tensions in the region. Also with the first raft of U.S. sanctions hitting the Iranians, causing civil unrest in that country, the region is poised once again to face a rather grim future. This aside, trade continues expand on the base oil front, with exports of Group III playing a major part in the region’s economy. Middle East Gulf Group l receivers have confirmed the import of the large parcel of Russian export base stocks which was loaded out of the Black Sea STS out of Kavkaz.

There have been no reports again this week of any availabilities of Group l base oils coming out of Iran, although strictly speaking these would not come under the sanctions umbrella as yet. However the threat from the U.S. with regards to any parties dealing or trading with Iran locally, may be sufficient to discourage any obvious and blatant purchases of any material from that source. Some sources based in the United Arab Emirates have indicated that premium Iranian SN500 grade is still available priced at around 3,800 U.A.E., dirhams per ton delivered into ports in Sharjah.

Far Eastern buyers are the latest announced to be looking at taking a cargo of around 6,000 tons of Group III base oils ex Al Ruwais, U.A.E.

Notional FOB numbers remain assessed between $775/t-$800/t, basis FOB Al Ruwais and Sitra, Bahrain for all three viscosity grades of partly-approved Group III base stocks. Neste fully approved Group III material from Sitra refinery is estimated to netback higher at between $835/t-$865/t.

Note should be taken that 8cst material being exported to India and Far East may show lower netback levels due to lower achievable selling prices which exist in those markets. Levels are estimated to be around $75/t-$100/t lower than those quoted above.

The numbers above refer to FOB levels established on a notional netback basis using published shipping freight rates, and taking into account advised local selling prices, plus notifications of bulk CIF/CFR cargo prices from various sources.

No further news has been gleaned regarding the Group II base stocks potentially moving from Yanbu to Italy, with sources based in Europe watching the scene closely to evaluate the results from this supply.

In Middle East Gulf prices of Group II base stocks FCA, truck or flexi delivered from U.A.E. sellers are maintained as last week’s new levels with sources in U.A.E. confirming that offers from Al Ruwais are competing with the incumbent supplies, these offers are based on truck deliveries at around $885/t for 4 and 6 cSt grades. Prices for 100N, 150N and 220N are maintained at $995/t-$1,040/t, with 500N and 600N at $1,085/t-$1,125/t. These prices pertain to small quantities of less than 25,000 tons per load.

Africa

Another cargo of around 8,000 to 9,000 tons is to be loaded out of Amsterdam-Rotterdam-Antwerp and Sicily and discharged into Durban, South Africa. These parcels are almost inter-affiliate trade which are not available for pricing to this report, but presumably are competitive against local Group l grades when landed into the South African market.

Reports from West African markets suggest that a cargo of some 8,000 tons may be loaded for Ghana where around 5,000 tons of three Group I grades will form the supply under the tender into Tema. The balance of the cargo may as suggested last week, be sold into Senegal and Guinea, taking advantage of freight savings by initiating a larger parcel going into the region.

There are no further confirmed cargoes for Nigerian receivers this week, although it is considered that a further parcel of around 10,000 tons is being worked out of the U.S. Gulf Coast. At the same time there are also talks of a European supply, in addition to Baltic enquiries which have not yet been issued in the market.

The Nigerian base oil market is dull at the moment with a couple of players electing to come out of the base oil import trade for the time being, citing government interference with cargoes being re-distributed to resellers and other local traders who may not have the requisite blending licenses.

Rumors around the pricing of the Baltic cargoes appear to have been at best exaggerated, or at least any low prices accorded to these cargoes have not been passed on to receivers in Apapa. Levels appear to be in line with the last few supplies both from Baltic and the U.S. Gulf Coast.

Prices are adjusted slightly for Group l base oils landed into Nigeria, with light SN150 at $785/t-$800/t, SN500 and SN600 at $875/t-$895/t, bright stock at $935/t-$955/t and SN900 ex the Baltic at $910/t. These prices apply to cargoes from U.S. Gulf Coast and Baltic points and are for large parcels in excess of 10,000 tons total of Group l delivered CFR or CIF into 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.