ICE LS gas oil rose to $679 per metric ton for September front month settlement, some $30/t higher than last. These prices were established in late London ICE trading yesterday.

Europe

Group I export prices throughout Europe were unchanged this week, following adjustments in the last report. Demand is slow and seems to be softening as some buyers look for lower prices for September lifting. Light solvent neutrals were between $735/t and $755/t, while SN500 and SN600 were at $825/t-$860/t and bright stock remained at $875/t-$900/t.

These prices refer to large cargo-sized parcels of Group I offered on an FOB basis ex mainland European supply points.

Group I activity within Europe has been minimal in terms of trades completed, although most agree that this will be the last week of a slow summer pace since almost all players should be back at their desks after next weekend. A number of sellers are already gearing up for a spate of activity to start next week.

There is no real clarity yet about whether sellers will bring levels into relative parity with export sales, which declined over the summer. Some sellers are waiting to see where crude and feedstock levels move to, perhaps hoping that an upward move could will stem downward pressure on base oils.

Prices are unchanged, but decisions about values for September are due next week. Downward pressure had been expected, but recent upswings in crude and feedstocks could offset that tendency. The differential between local prices and exports is currently assessed at 85/t-125/t.

The situation is similar for European Group II oils where demand is healthy and sales are expected to increase over the next month or so. Supply appears adequate to meet rising demand. FCA and truck- or barge-delivered prices remain unchanged with light-viscosity grades at $875/t-$920/t (745/t-785) and 500N and 600N at $955/t-$975/t (815/t-820).

Group III base oil demand continues to improve. FCA prices grades with partial sets of finished lubricant approvals are tweaked upwards this week to 765/t-770/t ($885/t-$895) for 4 centiStoke oils, 775/t-780/t ($900/t-$910/t) for 6 cSt and 785/t-790/t ($910/t-$920) for 8 cSt. Group III oils with full ACEA and European OEM approvals are assessed at 810/t-825/t for 4 cSt, 815/t-835/t for 6 cSt and 820/t-840/t for 8 cSt, all on an FCA basis Antwerp-Rotterdam-Amsterdam.

Prices are based on ex-rack or truck delivered smaller lots of Group III base oils, and do not reflect prices for material delivered in bulk cargoes to larger users, for example to major blenders or additive manufacturers. Prices for those trades may be considerably lower than levels above.

Baltic and Black Seas

Baltic Sea reports suggest a slowdown for large cargoes bound for West Africa as those appear to currently exist only in inquiry stage. There are even few reports of smaller parcels making their way into Antwerp-Rotterdam-Amsterdam this week, although storage tanks there and in the United Kingdom are reportedly relatively full due to regular topping up and reduced off-takes during the summer.

There are further inquiries for cargoes of Polish bright stock in addition to other regular Russian exports from further north in the Baltic. The bright stock supplies from this source will have supply limitations, and with large parcels being drawn over the past month or so, stocks may need to be rebuilt.

As indications only, oils in this region are assessed to be priced around $695/t-$720/t for SN150, $765/t-$795/t for SN500 and $860/t for bright stock, all on an FOB basis.

Black Sea imports from the Mediterranean and elsewhere are very quiet, with the Turkish economic problems strongly impacting any trading into and out of the country. Group I imports from the Mediterranean and Russian supply sources are certainly affected, although the import of Group III grades appears to have gone ahead without any apparent disruptions.

Again, as indications only, prices for Group I base oils are maintained for the one Mediterranean cargo identified this week with light solvent neutrals around $765/t-$790/t and SN600 and SN500 remaining at $850/t-$885/t CIF.

Kavkaz, Russia, remains quiet after the large STS transfers undertaken during August, although one source in United Arab Emirates reportedly said that they are looking for another cargo to load in September.

It is anticipated that imports for partialy approved grades are being priced at $885/t-$920/t but that fully approved material from a Mediterranean source will carry a premium. Once again sources have commented that continued importation of these grades may become more difficult should the economic situation in Turkey continue.

Middle East Gulf

Red Sea news indicates further traffic from Yanbual Bahr and Jeddah, Saudi Arabia, taking supplies of both Group I and Group II base oils to locations in Middle East Gulf and Indias west and southeast coasts.

Oddly there are reports this week of a couple of Iranian Group I base oils cargoes moving out of Middle East Gulf, one to India and another to Sharjah, U.A.E. How these parcels are being transported is not clear, although it is unlikely that international tonnage wil be employed to move these cargoes out of the region. Due to the imposition of U.S. sanctions to come, parties associating or doing business with Iran will be black-balled by U.S. authorities. Prices are hard to determine but the supply into Sharjah will possibly be priced in local U.A.E. currency at around 3,800 dirhams per ton. U.S. dollar prices for material going into Mumbai is assessed at around $795/t basis notional FOB.

The largest export now from Middle East Gulf sources has to be quantities of Group III basse oils from the three producing locations within the Middle East Gulf. Notional FOB prices rose this week to $785/t-$810/t on an FOB basis at Al Ruwais, U.A.E., and Sitra, Bahrain, for those with partial slates of approvals.

Fully approved Group III sold by Neste from Sitra is estimated to netback higher at $845/t-$875/t for 4 centiStoke, 6 cSt and 8 cSt grades for material moving west to Europe and the U.S. Eight cSt material exported to India and the Far East may yield smaller netbacks due to lower selling prices. Levels are estimated to be around $75/t-$100/t lower than those quoted above.

The numbers above refer to FOB levels established on a notional netback basis using published shipping freight rates and taking into account advised local selling prices plus notifications of bulk CIF/CFR cargo prices from various sources.

Group II base stocks from Yanbu continue to India, but with no further suggestion that another parcel is being sent to the Mediterranean. In the U.A.E., prices of Group II base stocks FCA, or delivered by truck or flexi are maintained again with sources in U.A.E. confirming that offers for relatively small quantities of partly-approved grades from Al Ruwais are being offered for truck deliveries at around $875/t for the heavier grade.

Prices for fully approved 100N, 150N and 220N are maintained around $995/t-$1,040/t, while 500N and 600N are $1,085/t-$1,125/t. These prices refer to Middle East Gulf delivered prices for quantities of less than 25,000 tons.

Africa

There are some large inquiries out on the shipping markets for cargoes from Northwestern Europe going into West Africa, but it is not clear that these will be destined solely for receivers in Nigerian markets. These inquiries may be sourcing from a major who could deliver to a number of other locations in addition to Nigeria.

Prices are unchanged for Group I base oils landed into Nigeria. Light solvent neutral SN150 is assessed at $755/t-$785/t, SN500 at $830/t-$855/t and bright stock at $920/t-$940/t. SN900 ex the Baltic is assessed at around $880/t. These prices apply to the most recent supply ex Baltic and are for large parcels in excess of 10,000 tons total of Group I base oils delivered CFR or CIF into Apapa port, Nigeria.

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