Europe

Prices for European API Group I exports are unchanged this week given the absence of confirmation of buyers accepting the higher prices being pushed in offers – plus there are reports of a couple of sales being completed at levels previously indicated. Supply and demand appear to be stabilizing as availability eases.

Light solvent neutrals are still valued between $780/t and $795/t, while heavier solvent neutrals are $845/t/t-$875/t. Bright stocks are still in demand, but more material has been reported in offers this week, perhaps to avoid buying frustrations that could have led to prices hardening. Bright stock prices are $945/t/t-$985/t.

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

Group I prices for sales within Europe have been difficult to define by any single movement or activity. Prices appear to be dependent on location, source of supply and stock positions of resellers and distributors. Some prices were adjusted upwards from March 1, whilst others were left intact, and in just a few cases – mainly in the United Kingdom and Scandinavia – there have been reports of prices coming off by a few euros or pounds.

Demand is still positive, with some buyers looking for material over and above contracted supplies. The tightness described over the second half of February does not appear to have continued, with some sellers offering spot barrels for prompt sales. However, there are still worries regarding Baltic cargoes that are due to arrive into Amsterdam-Rotterdam-Antwerp and the U.K. during March; they may be delayed by a couple weeks, although this does not seem to be affecting prices.

The differential between export and local sales prices remains 80/t/t-95/t, local prices being higher.

With Group I prices perhaps starting to stabilize, Group II distributors and resellers are being very attentive to the fluctuating differentials between Group II grades and their Group I counterparts, as these spreads are extremely important to the acceptance of some Group II base oils for future developments and formulations.

Group II prices have risen since last reported, but in some cases have almost taken on what could be described as posted pricing, with discounting and adjustments being made privately and confidentially between sellers and buyers.

FCA prices from API Group II distributors are tweaked higher, at $900/t-$920/t (725/t-740) in respect of light vis oils, with heavier grades between $970/t and $990/t (780/t-800). In many cases, though, net prices realized may be somewhat lower.

Lubricant markets, which can react to the availability and purchase of Group III base oil within the European regions, are seeing all suppliers marketing activity increasing, with a concentrated drive to establish these grades wherever possible.

European imported prices have risen to $890/t-$920/t CIF in respect of 4 centiStoke and 6 cSt grades discharged into northwestern Europe. Distributors local euro FCA sales levels are now 855/t-870/t in respect of 4 cSt and 6 cSt grades. ACEA- and original equipment manufacturer-approved products are estimated to be higher, at 885/t-900/t for 4 cSt and 6 cSt grades, with 8 cSt material at 865/t-880/t, basis FCA Antwerp-Rotterdam-Amsterdam.

The latter prices are in respect of FCA or truck-delivered Group III base oils sold to local blenders, and do not apply to material delivered in bulk cargoes to large users of these grades, such as major blenders or additive manufacturers.

Baltic and Black Sea

Tightness is starting to improve, with more availability coming into shore tanks in the various loadports in the region. Whilst one major turnaround is completed, there are other refineries about to start downtime, which may further impinge on availabilities out of Russia, and ultimately Baltic exports.

Prices had moved upwards but now appear to have stabilized, but whether another short market could impose higher prices remains to be seen. Sellers representing the refineries going into turnaround have reported that they have sufficient stocks in tank to cover any short-term supply crisis.

Prices are therefore maintained at $730/t-$755/t FOB for SN150 offers and $775-790/t for SN500. SN900 is also indicated in large quantities between $835/t and $855/t FOB. Bright stock is currently indicated between $875/t and $955/t, depending on specification, quantity, and supplying location.

Yet another large cargo is reportedly being assembled for STS loading out of Kavkaz, Russia, but with the destination unclear, it may be assumed that this cargo could go north to Rotterdam for onward shipment to South America. The last parcel sailed at the end of February for Singapore, where receivers will use this quantity of Group I grades to fill gaps in the market where only premium Group I grades are normally available.

Turkish imports from Azov and Mediterranean continue, and with demand rising for finished lubricants within Turkey and surrounding markets, supplies are starting to build to higher levels than seen for some months. Gebze, Turkey, and Derince ports continue to receive most of the Mediterranean-sourced Group I and Group III material being imported by Turkish receivers.

Group I levels in offers are higher again this week, although one source commented that these prices referred to offers two or three weeks old, noting that prices seem to have stabilized since then. This can only be borne out in offers next week or thereafter. Levels are $795/t-$820/t for light neutrals, with SN600 and SN500 at $860/t-$875/t CIF. Group III prices reflect European mainland levels at $880/t-$920/t CIF in respect to 3,000- to 4,000-ton, Mediterranean-sourced cargoes of 4 cSt and 6 cSt grades.

Middle East Gulf

Saudi Arabian suppliers have nominated a vessel to load around 15,000 tons of base oils out of Yanbu, and whilst this cannot be confirmed, it is surmised that this pertains to a second Group II cargo set to discharge in the west coast of India. Prices are not available, although CIF indications from sources in Mumbai suggest that this parcel will also be sold at extremely attractive levels.

Sources in the United Arab Emirates have confirmed that almost all of the Iranian Group I production, particularly the SN500+ grade, has been diverted into local domestic production of finished lubricants. The absorption of what was large quantities of base oils marked for export into the west coast of India, U.A.E., and East Africa has been exceptional, and there is no additional news to suggest that Iranian production of Group I base oils has been interrupted. No export prices can be established without the availability of product.

Al Ruwais export prices established on a netback basis are maintained, but there are also questions regarding the exceptionally attractive Group II prices being levied against delivered quantities coming in from Red Sea sources. Group II grades could possibly compete with the relatively new production of Group III supplies from the Middle East Gulf, which had previously usurped the original Group II base stocks going into U.A.E. and Indian markets that had been formerly sourced from the Far East and U.S.

These moves could lead to prices being adjusted to compete with Group II supplies, which might bring levels back to where they were around a year ago.

At the moment, given all destinations, prices for Al Ruwais-sourced material is assessed to netback levels of $780/t-$795/t FOB in respect of the 4 centiStoke and 6 cSt grades. Sitra partly-approved Group III barrels are estimated at similar levels. Fully approved Nexbase material exported from Sitra under the Neste banner will netback higher and is estimated at $810/t-$825/t basis FOB. The FOB levels are all determined on delivered netback estimates, and depending on cost allocation processes, notional FOB numbers can be achieved. These figures are for comparison purposes only.

Suppliers and their distributors of Group II base oils moving into U.A.E. from outside the Middle East Gulf region are all questioning what might happen when the new Saudi Arabian production arrives into Middle East Gulf markets, although fears that these prices may undermine current market levels may be unfounded, since local sources have commented that the new Group II grades from Yanbu have been delivered into other Gulf Cooperation Coil locations at levels comparable to European pricing.

Levels remain unchanged at around $785/t in respect of 100N and 150N grades, with 500N and 600N at $880/t-$895/t CIF Middle East Gulf. Prices for local sales in U.A.E. for Group II base oils on FCA or delivered basis are also maintained, with light grades such as 100N/150N/ 220N at $895/t-$920/t and 500N/600N between $1000/t and $1045/t.

Africa

South African receivers are currently discharging cargo from Rotterdam and the United Kingdom into the domestic market.

In addition to the Italian parcels loading for Mohammedia, Morocco, there are further quantities of Group I base oils being assessed from Rotterdam and Baltic supply points.

A forthcoming cargo ex Mediterranean will probably supply Guinea, Cote dIvoire and possibly private receivers in Ghana.

Since the ICIS conference in London, many Nigerian receivers and direct buyers have gone into negotiation mode, with a number of enquiries on the table for discharge during April. These requirements are being worked from Baltic, northwestern Europe, Mediterranean and the U.S. Gulf Coast, with all sources being weighted against each other for the best deal on specification, quality and of course, price.

Prices for new business into Nigeria are not yet defined. Although armed with current FOB numbers and estimates on freight, levels indicated last week could be used as guide numbers for material going into Apapa. SN150 would be $875/t-$895/t, with SN500 at $955/t-$975/t and bright stock between $1035/t and $1065/t. SN900 loaded ex Baltic is indicated at only $955/t.

These prices refer to quantities of Group I base oils delivered CIF/CFR Apapa, Lagos, in minimum parcel sizes of 6,000 tons total. For larger cargoes, proportionately less freight would be apportioned to these prices.

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