Europe

Demand is sadly lacking, and Group l prices have declined further this week. A number of suppliers are trying to move material by showing incentives in offers on the table. Some sellers are setting prices in advance, looking forward three to four weeks, and offering levels which they think will be pertinent at that time. This is pulling down other offers, adding to the overall decline in the market.

For example, light solvent neutrals have dropped another $10/t from FOB prices; SN 150 is now $860-$875/t and heavier neutrals such as SN 500 between $865-$880/t. Bright stock bucks the trend at $1070-$1095/t.

The price bands quoted above refer to offers for export parcels of Group l base oils ex mainland European and North African producers.

Local sales are severely limited due to poor demand. Suppliers are being pushed to bring domestic prices down closer to export levels, while sellers are trying to wring every last cent out of sales to blenders in mainland Europe. Differentials between domestic prices and export levels, slightly higher this week due to decreases in export numbers, are 40-55/t.

European Group II prices are now close to if not below domestic Group l levels. Sources expect these imported products to remain long in supply terms for some time, and this will hold prices in check. Light vis grades are $990-$1010/t and heavier 500N and 600N products are $1015-$1045/t, basis ex tank in Northwest Europe.

European Group III prices are in the same range as last report, between 870-895/t basis ex tank sales for 4 and 6 cSt grades. A number of buyers expect decreases to be advised this week, effective after Nov 1.

Baltic & Black Seas

For the two main grades SN 150 and SN 500, Baltic sellers have tried to stabilise prices of $825-$840/t. However there are unconfirmed reports of counters $40-$50/t lower. Most sellers maintain that prices cannot go much lower due to FCA levels plus duties and taxes which are levied on exports. Buyers do not share this position, anticipating a sell-off during November and December.

Baltic SN 900 has again been offered at $895/t FOB, but buyers are sitting on the fence, expecting this level to come down.

Black Sea trade has altered substantially since the Ukrainian situation and the annexing of Crimea by Russia. Traditional supplies from southern Russian refineries have been diverted to the north, and buyers in regions such as Turkey have opted for mainland European supply in preference to Russian or Uzbek material.

Mediterranean offers for Group l solvent neutrals are reported at extremely low levels, although these levels are reported from buyers: $865-$880/t for neutrals, with bright stock in one offer only, at $1095/t, basis CIF Gebze/Aliaga.

Middle East

Reports are sketchy, but supplies of both base oil and finished lubricants are finding their way into supply chains for all sides in Syria and Iraq.

Heavy discounting across all grades and types of base oils is reported in Middle East Gulf regions. Prices for local supplies of what are possibly Iranian Group I products to be re-exported have been heavily discounted over the past week or so, to meet market expectations in destination markets such as the west coast of India or East Africa.

Prices for SN 500 ex UAE are down $50-$60/t, to around $870-$890/t, basis FOB UAE ports. These grades tend to see-saw in price depending on availabilities which have been scarce of late with much of the trade going cross border into Iraq and Kurdistan.

Solvent neutrals from sources such as Saudi Arabia have also fallen, and are reaching Middle East Gulf receivers at $925-$940/t. Bright stock offers have been pulled and reoffered at higher levels, suggesting this grade may be going short globally. One offer for 3,000 tons of European bright stock has been confirmed at $1118/t CIF UAE, which confounds receivers targeted price of around $1050/t.

Group II offers from Asian and U.S. sources are flooding the markets, with prices around $988-$994/t for material from the U.S. Gulf for November delivery — the higher end of the price range applies to the heavier vis grades. Far East prices are comparable and even lower in some cases, particularly for heavier grades which are less popular in Far East home markets.

Africa

South African markets report a sudden awareness of Group II grades and their prices, which could stem the production of Group l from the two producing refineries in this region. Prices for Group l have traditionally been high in southern Africa, with storage and distribution added to refinery gate prices. With landed prices for Group II grades in a spread of $1050-$1100/t, adding storage, inland transportation and delivery costs of perhaps $60-$100/t, these grades may come into line with existing Group l market levels.

Nigerian receivers want source markets to fall quickly so that they can benefit from whatever discounting is yet to come. Two importers said this week that they were running dangerously close to a stock-out situation with the possibility of not having material in tank during November to cover their customer base. Others accept that interim cargoes must be purchased to protect their end users. One large cargo is due to arrive before end October, but attempting to assess prices for cargoes landing at different stages, and from various sources, has been almost impossible.

Without confirmation from local agents, material arriving into Apapa between now and end October is estimated at $915-$935/t for Group l solvent neutrals, and $1110-$1120/t for bright stock. SN 900 has been offered and accepted around $1034/t, but quantity, source and specification are not confirmed.

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