Europe

European Group I export prices are mainly showing weaker, with some sellers claiming stocks are higher than any time during the past couple months. That could be because of base oil output rising or because demand is decreasing as the summer holiday period approaches.

Price assessments are maintained until direction becomes clearer, so light solvent neutrals are $785/t-$825/t and heavier grades $885/t-$925/t. Bright stocks are heard lower this week thanks to increased availability. Prices are $945/t-$965/t. These levels pertain to large cargo-sized parcels of Group I sold on an FOB basis from mainland European supply points.

Prices for Group I sales within Europe also remain unaltered, with sellers trying to hang on to current prices for as long as possible. This is against a backdrop where buyers are looking for lower levels due to falling crude and feedstock values. Some blenders said this week that they are expecting prices to be lowereds at the turn of the month, when seasonal demand is due to fall further. Others said they are postponing purchasing major quantities of base stocks until after the summer recess due to inventories running higher than required.

The differential between local prices and export numbers is currently assessed between 60/t-90/t.

Group II prices are also unchanged and do not seem to be under upward or downward pressures. Market share protection continues to be one of the main objectives for sellers, but at the same time major players are extremely confident that Group II base oils are moving to a position of strength with the impending introduction of ACEA 2018 before the end of the year.

FCA or delivered prices are maintained this week at $875/t-$920/t (745/t-785) for light neutrals and $955/t-$975/t (815/t-820) for 500 neutral and 600N.

Group III prices are described as stable by both sellers and buyers after increases at the end of May. No further markups have been announced by producers or distributors.

Values for FCA sales in euros are maintained at 765/t-780/t for the 4 centiStoke grades, 785/t-800/t for 6 cSt and 785/t-790/t for 8 cSt. These prices are for Group III oils with partial slates of finished lubricant approvals. Those carrying ACEA and European OEM engine oil approvals will command more – 800/t-825/t for 4 cSt, 820/t-845/t for 6 cSt and 825/t-850/t for 8 cSt, all on an FCA basis at Antwerp-Rotterdam-Amsterdam.

These prices are for ex-rack or truck-delivered smaller lots of Group III oils and do not reflect material delivered in bulk to large users such as major blenders or additive manufacturers, which may pay considerably less.

Baltic and Black Sea

Baltic trading appears to be steady to soft, with prices only slightly lower than last week. The large cargo being arranged for Nigeria has still not been loaded according to sources, although receivers in Lagos claim it has been fixed clean and should have loaded last week. Cargoes going into Antwerp-Rotterdam-Amsterdam, the United Kingdom and Scandinavia continue to be the focus of Baltic sellers, with around six parcels designated to move out during the second half of June.

The two main Russian export grades, SN150 and SN500, are respectively priced at $740/t-$775/t and $825/t-$840/t. SN900 is assessed at $875/t-$895/t, while bright stock is $845/t-$920/t, depending on source and loadport.

Sources in the Black Sea confirmed that another large cargo ex STS Kavkaz, Russia, has been loaded, but quantities have not been divulged. Prices are considered to be keen with suggested levels sub $800 for SN500 – presumably in order to be able to compete against Iranian SN500 in the Middle East Gulf and India. The destination for this large cargo has not been confirmed, therefore on an historic basis, either Rotterdam, Singapore or Middle East Gulf can be considered.

Mediterranean-sourced Group I base stocks are moving into Gebze and Derince, Turkey, adding to local supplies from the refinery in Izmir. Prices for these cargoes are heard at $795/t-$825/t for light solvent neutrals and $900/t-$935/t for SN500 and SN600, basis CIF.

Fully ACEA approved Group III material ex Mediterranean is being offered delivered to Gebze at $865/t-$895/t for 4 and 6 cSt grades, basis CIF. Partly approved Group III base oils are also being offered into the Turkish market from European distributors.

Middle East Gulf

Red Sea reports contain news of more cargoes loading out of Yanbu and Jeddah, Saudi Arabia, some for regular routes such as the milk round into Oman and multiple ports in the United Arab Emirates.

The Holy Month of Ramadan has finished, and Eid holidays are now being celebrated throughout the Middle East, meaning that business is returning to normal but many key players are missing from their desks. Since Ramadan came very early this year and just ahead of the summer vacation period when Middle East Gulf countries slow down for around two to three months, trade has been sluggish throughout the region and will probably remain so for another couple months.

There are a number of Middle East and Indian base oil conferences planned during this quieter spell, which may throw up some interesting topics to assuage the appetite for rumor and discussion.

There are reports of a number of Iranian cargoes of SN500 base oils being offered to receivers in the U.A.E. and on the West Coast of India for prompt loading during the second half of June. One U.A.E. source said prices for Iranian premium SN500 are $845/t-$855/t delivered into Sharjah ports, suggesting FOB levels around $815/t-$830/t out of Bandar-e Emam Khomeyni.

Group III trading in the Middle East Gulf has returned as many cargoes have been identified coming out of production sites in the U.A.E., Qatar and Bahrain. Cargoes totalling more than 30,000 tons are loading from Al Ruwais, U.A.E., bound for the West Coast of India and other U.A.E. ports such as Hamriyah and even to distributor storage in the Far East, Europe and the United States.

FOB prices calculated for this report are maintained at $795/t-$820/t for 4 and 6 cSt oils from Al Ruwais with partial slates of approvals. Values for oils marketed by Bapco from Sitra, Bahrain, are at similar levels, but those sold by Neste from the same source have full slates of approvals and should have higher netbacks – $835/t-$865/t for 4 and 6 cSt.

These numbers refer to FOB levels calculated on a netback basis using published shipping freight rates, reported selling prices and bulk CIF/CFR cargo prices from various sources.

Getting a price fix on cargoes of Group II ex Yanbu has been almost impossible between conflicting information from different locations and reports that different pricing structures are used for different markets. Local supplies of U.A.E. Group II base stocks have been reported towards the end of Ramadan, available on either FCA, truck- or flexi-delivered basis. These oils are being priced at $1,025/t-$1,060/t for 100N, 150N and 220N and at $1,120/t-$1,170/t for 500N and 600N. There have been reports of 500N from various sources being offered at $890/t ex-tank Al Ruwais in U.A.E.

Africa

West Africa receivers in Nigeria confirmed that they are expecting a large cargo from the Baltic to arrive into Apapa port in Lagos during July, but so far ultimate confirmation of this transaction has not entirely been forthcoming. At the same time, there are rumors of yet another U.S. Gulf Coast cargo being finalized and due to sail within the next two weeks. Group II grades are again supposed to form part of the new cargo, but exactly which grades and the identity of the receivers remains part of the mystery.

Prices for Group I base oils going into Nigeria are revised slightly lower this week and are only estimates – $865/t-$910/t for SN100 through SN180, $965/t-$988/t for SN500, SN600 and SN700 and $995/t-$1,025/t for bright stock from the U.S. Gulf Coast or the Baltic. SN900 ex Baltic supply has been assessed at around $975/t.

Quoted prices refer to large parcels of more then 6,000 tons of Group I base oils delivered on a CFR or CIF basis 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.