Base oil prices within Europe are still moving downward, with a number of producers and sellers with plentiful supplies applying decreases without a great deal of buyer pressure.

Group I grades ex mainstream suppliers have dropped $25-$40/t. There appears to be an approaching consensus on FOB levels bringing most supplies within relatively tight ranges. For example, light solvent neutrals throughout Europe are now offered at $820-$855/t, with heavier cuts such as SN 500 at $860-$875/t. Buyers are pushing for lower prices and in some cases on “one-off deals, business may be fixed some $10 lower. Bright stock has also come under pressure, with some buyers saying that this grade has to come into line with other Group I products despite being in higher demand. Offers for quantities upward of 500 tons per parcel were $1025-$1050/t from both northwestern Europe and Mediterranean suppliers.

The FOB ranges refer to larger export offers and sales of Group I base stocks made available ex suppliers in mainland Europe and sometimes North Africa.

Local sales volumes within Europe have also fallen significantly over the last ten days, with sellers trying to retain customers by cutting prices for all Group I grades. There appears to be almost a price war in parts of Germany, U.K., and Benelux, with blenders having options to purchase from a number of sources.

Prices touted for local supplies made either ex rack or by truck have fallen 30-50/t over the past weeks with levels only now becoming apparent. A few buyers and also sellers suggest that the market may have bottomed out for the coming weeks, saying that crude and feedstocks may have flattened, and that future prices for Group I will reflect this. Others are convinced that further adjustments will be probable.

This week, a premium of 60-75/t is assessed as the differential of local prices over export levels, mainly due to the cuts made to export levels over the past few days.

Group II levels having firstly been discounted at source, and thereafter being compared to Group I prices in Europe, have been rapidly decreasing in value over the past weeks. Some FOB prices offered out of the U.S. Gulf Coast, for instance, have allowed traders to import Group II material into Europe at levels which are favorable against Group I levels, and in some cases can be substantially below Group I prices until the last downward revision for these grades. Traders operating break-bulk operations are few, but more are adapting to a trade where Group II grades are being resold into the domestic European markets.

Prices are realigned to $890-$925/t for the light vis grades, with 500N and 600N products at $905-$955/t. The effect of the large cuts in Group I levels has been to reestablish a premium for Group II, although how long this will continue is hard to say. All prices are quoted ex tank Antwerp-Rotterdam-Amsterdam-Germany.

Group III supplies within Europe, both from indigenous suppliers and imports, appear to have remained unscathed by the far-reaching cuts in Group I and Group II prices. However, a number of buyers suggested that it was merely a matter of time before these grades were brought into line with the rest of the market. Some news suggests that Group III levels will fall 35-50/t on Nov. 1.

Levels for Group III are moving downward continuously, with some suppliers granting retrospective discounts, and others relying on fixed and firm forward-pricing. Post-Nov. 1 levels are assessed at 845-870/t in respect of ex tank sales for both 4 cSt and 6 cSt grades.

Baltic and Black Seas

Baltic sales of Russian, Belarus and other East European base oils have seen large discounts to the two main grades, with SN 150 and SN 500 below $800/t in some offers. Levels of $785/t FOB have been quoted, although quality has not been confirmed. Higher specification products are expected to sell at $810-$825/t, with avails of SN 900 offered at $885-$998/t. Availability of all grades appears to have improved, with abundance to cover enquiries from Africa and Middle East.

Similarly, Black Sea prices have marked down, with a variety of sourced products offered to receivers in the region, the mainstay of which are based in Turkey. Buyers have flooded the local market with a large number of enquiries for all grades from Uzbek, Russian and Mediterranean suppliers. Averaged offers are $785-$825/t basis FOB, in respect of SN 150 and SN 500 grades, but depending on where these products are sourced, landed CIF price levels are $820-$855/t, whether delivered into Aliaga or Gebze. A 700 ton parcel of bright stock as a part cargo of other Group I grades has been mentioned at $1065 CIF main Turkish port.

Middle East

Middle East Gulf prices have mirrored mainland Europes drops, although there does not appear to be the availability present within this market, particularly for Group I. Supplies of Iranian Group I are rumored to have been selling into Iraq, Syria and Kurdistan where a void has occurred. Supplies of local Group I are limited, with imported solvent neutrals from Saudi Arabia, Pakistan and the U.S. filling the gaps.

Local avails of Iranian SN 500 are $830-$845/t basis FOB United Arab Emirates ports, with talks of further downward movements bringing supply into line with both local and other import options, such as European sources, since arbitrage is now open. Traders are looking at large cargoes of European and Baltic Group I grades to import into U.A.E. and the west coast of India.

Bright stock imports have been declared at around $1088/t CIF Sharjah port, accompanied by parcels of Group I and also Group II grades in one cargo.

Imported Group II grades have seen prices crumble to $955-$970/t in offers for November, and with these prices also under pressure, buyers are stalling for lower numbers which they anticipate during the first half of November from both Far East and U.S. supply points. Sources in U.A.E. revealed that they will receive offers for Group II grades during the first week of November, which they claim will be close to $900/t delivered.

Africa

South African players are gearing up for the base oil conference in Capetown next week, with suggestions that a number of fundamental changes will be taking place in coming months and years. Even with the inclusion of Group II imports starting to play an important role in the region, there are still plans to bring in large slugs of Russian Group I base oil from Baltic sources which can be sold to blenders in the South African regions to fill a requirement for second-string base oils which do not have to carry approved specifications.

Current estimates are that SN 150 and SN 500 could be landed into Durban at around $900/t, with SN 900 at around $1075/t, which would yield considerable margins or savings for importers and end-users of these base stocks.

West African receivers are in deep negotiations with traders and suppliers in the Baltic and Europe. The standoff has depleted inventories to an extent that some Nigerian importers are running perilously low in stocks to supply their regular clientele, and are pushing to have material arrive at the earliest possible. Offers have reached new lows, with SN 150 and SN 500 at $900-$925/t in respect of Baltic material, with SN 900 from the same sources landed at around $1000/t.

One offer for 5,000 tons of bright stock has been confirmed at $1093/t basis CFR/CIF Apapa.

Ghanian buyers outside the Tema tender have issued an enquiry for 3,000 tons of mixed Group I and/or Group II grades, marking an interesting development for imports into this region. Trader sources from the U.S. are looking at this supply, but difficulties with the logistics of a 3,000 ton parcel might mean that this parcel is loaded with material already bound for Tema or another parcel discharging in Nigeria.

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.