Raw materials prices appear to have stabilized before passing key psychological barriers. Dated deliveries of Brent crude oil are hovering at just above $69 per barrel for March front month, down less than $1 from last week. West Texas Intermediate remained around $5.50 lower, at $63.70/bbl, also for March front month. On the oil products side, ICE LS Gas Oil dipped to $612 per metric ton for February front month settlement.

Europe

FOB prices for European Group I exports rose again the past week. Sellers are keen to implement markups without delay to account for rising costs. Some buyers are a little hesitant to accept higher values, while others are moving quickly to secure positions, believing that prices are not coming back down or may rise further.

Light solvent neutrals SN100 and SN150 moved upwards by another $15 to $25 per ton this week and are considered to be priced between $740/t and $775/t. Offers for SN500 and SN600 has also rose to $810/t-$840/t, while bright stock offers climbed $25/t to $920/t-$955/t.

The above levels pertain to large cargo-sized parcels of Group I base oils offered on an FOB basis from mainland European supply points.

A slightly different scene exists for local markets within the European arena, since prices are generally set in advance for either a time period or a set quantity offtake. These levels may be fixed or indexed to published prices. Sellers confirmed raising FCA and delivered prices by 30/t-40/t (35-47) the past week but said they will monitor spot export values.

Differentials between FCA sales (which are higher) and spot export levels held steady again at 65/t-80/t.

Group II suppliers in other regions – some of which export to Europe – continued raising prices in source markets this week, some for the second time during the current round. Blamed on rising raw materials costs, those markups have amounted to $50/t-$75/t.

Those increases appear to filtering to European markets in stages of smaller, more frequent increments. Some Group II buyers within Europe said prices have risen by around 40/t-55/t since the year began.

Prices delivered into European hubs are now deemed to be $730/t-$760/t for light-viscosity grades and $895/t-$940/t for 500 neutral and 600N. These prices refer to imported cargoes on a CIF basis landed into Antwerp, Rotterdam and Amsterdam ports. FCA or locally delivered prices from distributors also rose to 840/t-875/t for light-;vis oils and 920/t-965/t for heavier grades.

Group III prices have increased across the board. European imported prices are now assessed at $840/t-$870/t on a CIF basis for 4 and 6 centiStoke oils landed into Northwestern Europe, while local euro based FCA sales have risen 40/t-60/t to 810- 825/t, FCA Northwestern Europe. Group III oils carrying full European slates of finished lubricant approvals are at 855/t-875/t for 4 and 6 cSt and 820/t-845/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam. The latter prices refer to FCA or truck-delivered quantities sold to local lubricant blenders, not bulk cargoes delivered to large users such as major blenders or additive manufacturers.

Baltic and Black Seas

Apart from a couple of short sea trade cargoes moving to Antwerp-Rotterdam-Amsterdam and the United Kingdom, the Baltic base oil scene is unusually quiet during January. Some players have suggested that there are fewer availabilities coming out of Russian refineries now, which in turn will limit the avails of Group I base stocks for export out of this region. Traders and distributors appear to be shorter of products than marketers directly representing refiner, but ultimately even these sources do not seem to have the normal quantities for export sales.

A number of inquiries have been logged from West Africa traders and receivers, but little has come of them, perhaps because of availability. Sources mentioned two cargoes totaling more than 20,000 tons, and it is unclear whether price or availability kept deals from being struck. Some sources in the Baltic said they sold out during the latter part of last year or early January and are presently awaiting parcels traveling by rail from refineries.

Current FOB levels are difficult to fix at this time, but are estimated at $725/t-$745/t for SN150, $780/t-$800/t for SN500, $825/t-$855/t for SN900 and $895/t-$945/t for bright stock.

Black Sea trade has picked up and shows signs of growing further during February based on a number of local inquiries for material to be shipped across the sea and imports into western Turkey ports from Greece. The large quantities being supplied from STS loadings at Kavkaz, Russia, have been processed though the last has yet to load out of the region. Weather problems may limited movements of material from refinery to loading vessel.

The sources in Greece are looking to move a number of parcels into Derince, Turkey, by early February under contracts to supply this port and Gebze, Turkey. Prices have not been disclosed for these imports as yet but on an index-linked basis would be expected to climb to $785/t-$815/t for light neutrals and $865/t-$885/t for SN600, basis CIF.

There is also news of Group III grades being arranged for import into Turkey, including a 7,000-ton shipment that is being considered.

Middle East Gulf

Group I base oil trading has taken second – or even third – position in the Middle East Gulf to the exports of Group III emanating from the regions three supply points. Information from a variety of sources indicates that 75,000 to 100,000 tons may be exported during February. Instead of being unusual, these movements and these quantities are rapidly becoming the norm, and volumes appear destined increase further. Given that the region has capacity to produce around 2 million t/y of Group III, it will not be surprising to see exports approach 100,000 tons per month.

Estimated FOB prices for Group III grades are adjusted upwards due to rising raw material costs. Group III oils from Al Ruwais, United Arab Emirates, are now assessed at $795/t-$820/t for 4 and 6 cSt. Oils from Sitra, Bahrain, without approvals or with only partial slates of approvals are should be priced similarly, but fully approved oils from the other joint venture partner in Sitra will netback to $765/t-$785/t, FOB. Prices for oils from Shells and Qatar Petroleums plant in Ras Laffan, Qatar, are not available to this report, although some parameters may be drawn up in the future for comparison purposes.

Sources in the U.A.E. once again expressed concerns about the possibility of the U.S. – and subsequently other Western nations – re-imposing economic sanctions on Iran. There is a notable absence of Iranian export cargoes of Group I grades moving out of Bandar-e Emam Khomeyni, Bandar Bushehr and Bandar Abbas when receivers in India and the U.A.E., could be looking to import large quantities of Group I. Suppliers on the U.S. Gulf Coast appear to have filled the void.

Prices for deliveries from the U.S. Gulf Coast are $785/t-$845/t for light solvent neutrals and $965/t-$985/t for bright stock, all basis CIF.

Other U.A.E. sources maintain that premium SN500 is still available from Iran. Without confirmation of availability or prices, though, the last price heard remains the only indication for this grade. FOB numbers were assessed at $810/t-$825/t some 15 days ago.

There are still no news bulletins from Saudi Arabia about the Group II upgrade of Luberefs plant in Yanbual bahr, which was due to be completed last month. Prices for Group II imported from Far East and U.S. sources rose again this week to $790/t for 100N and 150N and $895/t-$920/t for 500N and 600N, CIF Middle East Gulf. Prices also increased for local sales in the U.A.E. for Group II base oils on an FCA or delivered basis, to $895/t-$925/t for 100N, 150N and 220N and to $975/t-$1015/t for 500N and 600N.

Africa

East African and South African receivers had been looking for quantities of Group l and Group II grades to import from other regions, but they were disappointed by the offers received from various sources. Some said they are better off using base stocks imported in large quantities by oil majors or large traders. The offers were described as high in price and low in quality. In reality the offers reflected current prices and the quality required for these markets.

In the West African market, reports indicate that only one cargo is currently being prepared – a shipment of Group I for an oil major. Local buyers have retracted other inquiries and are only awaiting arrival of a couple of large cargoes coming into Nigeria from the U.S. Gulf Coast. The cargo referred to above is perhaps destined for markets other than Nigeria or Ghana, although itis rumored that changes have taken place in the latter supply.

Nigerian receivers facing increased prices for any base oil cargoes being purchased now for import into Apapa or Onne. A Baltic inquiry encountered prices deemed too high for the Nigerian market, where oil marketers say they cannot raise prices for finished lubes. There are a number of offers on the table from traders and others who have taken positions on cargoes, but these are currently being dismissed by buyers who are only too aware of the sellers’ position and are looking to take advantage of this situation.

Some local buyers are looking to take waste lube oil into Nigeria, presumably for re-cycling or re-refining, and some sellers are offering re-refined light-vis base oils, which have previously been tried and tested successfully in Nigeria. These products are apparently available ex-Europe at prices some $150/t-$200/t cheaper than virgin base oils.

Prices have to be realigned again this week in light of FOB increases that will apply not just in mainland Europe and the Baltic, but also in other source markets such as the U.S. Offered levels are now estimated at $890/t-$915/t for SN150, $925/t-$965/t for SN500 and $1,045/t-$1,075/t for bright stock. These levels are for CIF/CFR offers for material delivered from any source, since there do not appear to be any apparent price advantage from anyone buying location. Russian SN900 is currently priced at $995/t.

The prices above refer to parcels of at least 6,000 tons of Group I base oils delivered on a CIF/CFR basis to Apapa, Lagos.

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