API Group I prices are steady, with adequate availabilities of all grades. The segment may not be awash with material, but buyers are able to pick and choose supply options. Predictions that numbers would rise in January appears to be unfounded as values remain firmly around the same levels as December.

Group II prices appear to be a shade firmer as some suppliers are suggesting that availability may be shortening up. There appears to be a reluctance from sellers to try to push prices higher particularly in Europe, where suppliers are keen to retain existing customers and to take on new buyers who have not previously bought Group II oils.

Group III markets are beginning to show signs of rebalancing with less product flooding the scene, particularly oils without full slates of finished lubricant approvals. There is still a lot of material around however, but with planned maintenance starting at a number of refineries, any excess of Group III grades may soon start to evaporate. Also demand for these base oils continues to rise.

Crude oil and feedstock prices are static and face little upward or downward pressure. Dated deliveries of Brent crude posted yesterday at $65.05 per barrel for March front month settlement, a few cents higher than last week. West Texas Intermediate crude was at $58.65/bbl, now also in for March front month. ICE LS gas oil is hovering around last week’s level and is quoted at $577 per metric ton in February front month trades. These prices were obtained from London ICE trading late Monday.

Europe

Group I export prices throughout Europe have remained static with almost all parts of this market echoing stability on prices. Any suggestions from sellers that these grades deserve higher price levels have been discounted by the buying fraternity who are largely controlling this sector of the market. Any attempt by sellers to try to hike prices has been thwarted by buyers who simply apply to alternative sources for the same supply.

Group I export prices throughout Europe have remained static. Sellers trying to raise prices have seen buyers go to alternative sources.

The price ranges for API Group I base oils are unchanged, in a market said to be balanced.

FOB prices are maintained with SN150 between $545/t-$580/t and SN500 at $555/t-$580/t. Bright stock is assessed at $615/t-$650/t. These prices apply to cargo-sized parcels of at least 2,000 tons sold on an FOB basis ex mainland European supply points, always subject to availability.

Domestic Group I base oils have also seemingly settled. Sellers have tried to lift prices higher, but in the same vein as the export market, buyers merely side-step to another source. Some sellers are trying to tie in contract barrels for the rest of this year.

However, buyers are reluctant to commit for more than a quarter in advance. Sellers are offering discounts for longer term contracts, but with buyers having ultimate choice in source of supply, sellers are finding it tough to plan ahead for production schedules.

Production at the refinery where fire damaged one of the lines has been restored, although full output will not return until after the end of January.

The price differential between domestic European Group I selling levels and export numbers remains at 45/t-65/t.

Buyers are claiming that European Group II prices are the highest of any global market, and should be adjusted to narrow the gap between Group II and Group I prices. Sellers are citing higher raw material costs trying to push prices higher especially for fully approved supply.

Some buyers are concerned that the new European quota system will hamper their ability to acquire needed supplies. These purchases are made up of smaller quantities of imported Group II in flexitanks which may become subject to an import tariff after the duty free limit has been reached. Buyers are making representation to various lubricant associations around Europe, and are lobbying EU personnel to raise these matters with the European Commission.

Prices are unchanged, with FCA levels at $745/t-$790pmt (675/t-740) for the two lighter viscosity grades (150N and 220N), with higher vis grades (500N and 600N) at $785/t-$825/t (715/t-750). These values apply to oils with full slates of finished lubricant approvals and to those with partial slates or no approvals.

Group III demand is growing positively, with a possible shortening up in the market when a number of major producers go into turnaround. This respite may allow distributors and resellers to firm prices. At this time, some prices for the non-approved Group III grades are below Group II levels.

Prices are unchanged with partly-approved Group III base oils at 650/t-725/t for 4 centiStoke grades, with 6 cSt and 8 cSt base oils at 665/t-740/t. Prices refer to FCA supplies ex northwestern European hubs.

Prices for the range of European OEM approved Group III base oils are also maintained at 740/t-810/t for 4 cSt base oils, with 6 cSt grades at 770/t-840/t and 8 cSt oils at 755/t-820/t.

Baltic and Black Seas

Trade of base oil out of Russia has returned to normal after the holiday period. Belarus base oil production has been halted due to the cessation of crude supply from Russia to Naftan. Around 70 percent of crude run by the refineries in Belarus comes from Russia, and although efforts are being made to sort out supplies, the absence of crude and feedstock will have a longer term effect on the production of base oils. Naftan may start looking to import base oils to support local blenders.

Baltic cargoes are loading out of Riga and Liepaja to arrive into Hull in the east coast of the United Kingdom prior to end of January when the U.K. will leave the EU. However there will be continuance of the Free Trade status between U.K. and EU countries for at least the rest of this year after which terms for the import of base oils into U.K. will be decided. It is hoped and anticipated that trading terms will remain the same, with a FTA for petroleum products being put in place between U.K. and EU.

A large shipment of around 12,000 tons to 15,000 tons of base oils is currently loading in the Baltic for Nigeria. This cargo may load Russian export barrels in addition to bright stock to be loaded out of Gdansk. This cargo follows another parcel of 13,000 tons which loaded out of the Baltic at the year-end, both parcels being sold to Apapa.

Russian export prices in the Baltic are maintained, with SN150 at $465/t-$490/t and SN500 at $470/t-$498/t. Bright stock loading ex Gdansk is at $620/t-$650/t FOB.

Black Sea trade is subdued this week after a busy period when large quantities of Russian export base stocks were loaded out of Kavkaz, Russia, and other Azov ports. The parcel of around 10,000 tons for Greece and Singapore has sailed and is en route now for Far East.

STS prices for Russian export grades remain around $455/t for SN500, with smaller parcels of SN150 at around $445/t.

Prices for Russian export barrels out of Azov for Turkey remain at around $496/t for SN500, with SN150 at $488/t, both grades are on the basis of CIF Gebze, Turkey, port. Local Turkish prices remain high by comparison, although many buyers are still tempted to buy from this source in Izmir, due to smaller quantities being purchased in local currency.

Offers from Greece appear higher due to increasing freight rates which may have come about following the change to lower sulfur fuel oil after the introduction of IMO 2020. Indications heard this week for Mediterranean Group I offers are $584/t for SN150 with SN500 at $596/t basis CIF Gebze, Turkey, or Derince. SN600 is indicated at around $605/t, with bright stock around $673/t.

Group II grades on the basis of ex-tank in Turkish ports are being priced at $725/t-$775/t, with partly-approved Group III base oils at $800/t-$845/t.

Middle East Gulf

Red Sea cargoes of bright stock are being planned out of Yanbual Bahr, Saudi Arabia, to cover the Egyptian General Petroleum Corp. tender in Alexandria, the next loading being at the start of February, with a follow-up towards the end of the same month. Large parcels of 10,000 to 12,000 tons of both Group I and Group II grades will load for the west and east coasts of India prior to the end of this month. Discharge will be into Mumbai and Chennai.

In Middle East Gulf news, an Iranian cargo has been identified as having loaded 5,000 tons out of one of the southern Iranian ports in early January. This is the first and only recognized parcel to move out of Iran for some time, and it is destined for the West Coast of India. U.S. sanctions obviously did not impede this cargo from loading, and local sources suggest that further movements of Iranian base oils will be forthcoming. With freight rates now much higher for vessels entering Iranian ports, FOB prices for premium Iranian SN500 may have been trimmed to accommodate this cargo moving into Mumbai. Receivers have indicated that the FOB price for this cargo may be around $500/t.

Offers in the United Arab Emirates for Group I sourced either from the U.S. Gulf or Atlantic coasts are at $618/t for SN500, $611/t for SN150 and $687/t for bright stock, all on a CIF basis Hamriyah, U.A.E.

Prices for Group III base oils with partial approvals being exported from Al Ruwais, U.A.E., and Sitra, Bahrain, are unchanged at $620/t-$665/t for all grades oils selling into Europe, the U.S., India and the Far East. Eight cSt grades sold into the latter two markets carry lower FOB prices because local selling prices are lower.

Two cargoes are loading out of Al Ruwais for Chinese receivers, one of 12,000 tons and another of 6,000 tons. The first cargo will move out during January, while the second parcel will load at the end of February.

Fully approved Group III oils ex Sitra refinery should provide higher notional netbacks and are estimated to be priced at $740/t-$825/t for 4, 6 and 8 cSt. Notional FOB prices on a netback basis are calculated using regional selling levels, less marketing, handling and freight costs.

Group II prices around the Middle East Gulf markets are unchanged at $775/t-$910/t for 100N, 150N and 220N, while 500N and 600N are at $795/t-$935/t, all on an FCA basis ex U.A.E. hub storage.

Africa

North African receivers are importing a number of base oil cargoes with Group l, Group I and Group III grades moving into two Algerian ports in addition to a Moroccan parcel for Mohammedia. Additionally two large cargoes are moving into the East African ports of Dar-es-Salaam, Tanzania, and Mombasa, Kenya, the latter parcel being part of a sizeable 18,000 tons shipment loading out of Antwerp-Rotterdam-Amsterdam and the U.K., destined first for Durban, South Africa.

Another large Group I cargo was announced loading out of the Baltic and going into Apapa port in Lagos, Nigeria. This cargo of some 15,000 tons is currently loading and will arrive into Nigeria around the end of February after loading in two Baltic region ports.

Cargoes discharging into Guinea and Cote d’Ivoire have been organized and will possibly load during February. Base oils for the receivers in Guinea and Cote d’Ivoire may form part of a shipment that would also discharge in Nigeria since the logistics and economics for delivering material into West Africa locations other than Apapa demand larger quantities to reduce per-ton freight costs. There are, however, restrictions on sizes of vessels going into Abidjan, Cote d’Ivoire and Conakry, Guinea.

Prices for Group I base oils discharging into Apapa are unchanged at $630/t-$645/t for SN150, $640/t-$655/t for SN500 and $720/t-$745/t for bright stock, all on a CIF or CFR basis. Blended SN900 is at $650/t-$675/t. These prices apply to cargoes of at least 10,000 tons being delivered into Apapa.

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

Historic and current base oil pricing data are available for purchase inExcel format.