Group I prices reflected this softness the past couple weeks. Values for European exports drifted downwards but now appear to have stabilised, partly due to firming feedstock costs.

Crude oil costs were generally stable the past week as dated deliveries of Brent posted yesterday at $78.10 per barrel for November front month, while West Texas Intermediate was at $68.35/barrel for October settlement. ICE LS gas oil dipped a few dollars to $680 per metric ton, also for October front month. These prices were gleaned from late London ICE trading yesterday.

Europe

Having gravitated downwards in recent weeks, European API Group I export prices were steady this week. Low prices appear to have helped sellers arrange movement of almost unprecedented quantities during the first half of September. Light solvent neutrals remain priced between $720 per metric ton and $740/t, while SN500 and SN600 are $795/t/t-$820/t and bright stock $865/t/t-$895/t. One cargo had to load at four ports to attain the required product mix, so large parcels of bright stock may be limited throughout Europe.

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

Group I sales within Europe have picked up since the beginning of September with many buyers looking to replenish inventories that were purposefully depleted during the summer months. Group II oils are providing increasing competition, but the drop in Group I values has perhaps slowed the rate of conversion. With softer prices around the market, blenders are taking advantage of the current situation to use Group I base stocks wherever possible. Prices are still reacting to the latest moves on export numbers and with more product becoming available and demand drifting lower, prices face continued downward pressure.

The differential between local prices and export numbers is altered slightly this week due to local price levels appearing to become weaker, and is now assessed between 70/t-90/t.

Group II trading is brisk with strong demand for available grades. A continuing stream of imports is seen arriving from U.S. and also from Far East, although these flows are expected to shrink after local European production starts around the first quarter of next year.

There are no revelations on prices, with most players reporting a stable market, and stable feedstock costs suggest no upward or downward pressure. As mentioned last week, Group I prices appear to be having a tempering’effect on Group II levels. FCA and truck/barge delivered prices are again unchanged at $875/t-$920/t (745/t-785) for light-viscosity grades and $955/t-$975/t (815/t-820) for 500 neutral and 600N. Prices for sales conducted in euros may fluctuate depending on exchange rates.

Sources report that Group III trading is expanding fast with good demand for the remainder of September and higher requirements being set for October. Prices for oils with partial sets of finished lubricant approvals are unchanged at 765/t-770/t ($885/t-$895) for 4 centiStoke grades, 775/t-780/t ($900/t-$910) for 6 cSt and 785/t-790/t ($910/t-$920) for 8 cSt, all on an FCA basis.

Group III base stocks carrying ACEA and European OEM approvals are priced higher, at 795/t-810/t for 4 cSt oils, 800/t-820/t for 6 cSt and 810/t-825/t for 8 cSt, all on an FCA basis at Antwerp-Rotterdam-Amsterdam.

Prices are based on smaller parcels ex-rack or delivered by truck, and do not reflect prices for material delivered in bulk cargoes to larger users, which may be considerably lower.

Baltic and Black Seas

One of the large inquiries for Russian and Polish export grades is reported in Baltic trade this week, although it would appear that not all requirements could be loaded from Baltic sources, since two additional loadports in Northwestern Europe and Iberian Mediterranean are to be involved in shipping this cargo of around 14,000 to 15,000 tons. The other large inquiry appears to remain in the market and has not been covered as yet.

It has also been a busy period for the routine cargoes moving into Antwerp-Rotterdam-Amsterdam and the east coast ofthe United Kingdom, although one source mentioned a 12,000-ton cargo of Russian export grades has been loaded for discharge in Singapore. This may be a first, and it tandems with another large parcel of Russian grades loading out of the Black Sea for Singapore.

FOB prices are unchanged this week although no direct confirmation has been received about FOB levels for a Nigerian cargo. SN150 is at $680/t-$700/t, SN500 at $755/t-$775/t, SN900 at $795/t and bright stock with a viscosity index of 90 from the southern Baltic at $840/t-$855/t, all FOB.

Black Sea trade appears to have made a comeback after the lack of imports into Turkey from various sources along the Mediterranean and Russia. Turkey is still experiencing major problems on finance and inflation, which are impacting base oil imports and the manufacturing of finished lubricants in that country, but there are a number of Mediterranean Group I imports recorded this week, and additionally some small quantities of Group III base oils ex a Mediterranean source.

Group I cargoes from Greek sources have been identified going into Derince, Turkey. Prices are not confirmed but assessed at $755/t-$765/t for light solvent neutrals and $825/t-$845/t for SN500 and SN600, basis CIF.

Reports from Kavkaz, Russia, as mentioned above, described a cargo of around 10,000 tons loading for Singapore, pairing up with the slightly larger Baltic cargo of similar material. Prices are deemed to be very competitive for both these cargoes, although average selling prices may be applied to the total tonnage involved.

Middle East Gulf

Red Sea exports and cross trades are in the news this week, with material moving from Yanbual Bahr and Jeddah, Saudi Arabia, to the West Coast and southern ports in India, as well as Sudanese receivers. One interesting shipping inquiry has been included for base oils to move into Durres port in Albania, loading either in Yanbu or Jeddah. If the latter is nominated as the loadport it would seem likely that the material being shipped will be Group I, and not Group II as has been moved into Italy recently.

Middle East Gulf Group I trades also include Saudi Arabian cargoes moving into the regular ports in the United Arab Emirates, but no Iranian availabilities have been reported this week. Contacts who were receiving Iranian cargoes on Indias West Coast reported that their Iranian sources have not come to the market for some weeks and are offering no material for the near future. It is unclear whether this is due to U.S. sanctions or tightness in the Iranian market. Iranian and U.A.E. sources were contacted but did not confirm nor deny these events.

With the Black Sea cargo ex Kavkaz moving to Singapore and the developing Iranian situation, Group I supply in the Middle East Gulf appears short, and with the European arbitrage now open, traffic may start to appear in the near future from sources in the Mediterranean.

Group III exports take precedence when looking at movements out of the region, including material moving into India and the U.A.E. from Al Ruwais, U.A.E., and Sitra, Bahrain. More than 50,000 tons will flow from Al Ruwais to India over the next few weeks, and an additional 10,000 tons is to be exported to Europe. Barrels from Sitra will move into the same markets.

FOB prices are unchanged this week, awaiting input from the various inquiries and cargoes on the table at this time. These levels are maintained notionally at $785/t-$810/t, FOB Al Ruwais and Sitra, for all Group III grades with partial slates of approvals. Sitra oils carrying U.S. and European approvals is estimated to netback $845/t-$875/t for 4, 6 and 8 cSt grades moving to Europe and the Americas. Shipments of 8 cSt bound for Far Eastern markets may show lower netback levels due to lower local selling prices.

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

Middle East Gulf prices for Group II offered on an FCA basis or delivered by truck or flexitank are maintained this week at around $895/t for heavy-viscosity oils delivered into storage in the U.A.E. Prices for fully approved 100N, 150N and 220N are maintained at $995/t-$1,040/t, while 500N and 600N are at $1,085/t-$1,125/t. These prices refer to loads of less than 25,000 tons.

Africa

North African markets are being served by deliveries of Group I coming out of Italy and Spain, highlighted this week by a number of Group III movements to receivers in the eastern Mediterranean. The Italian source also sold a large quantity of Group I to Cuba, although this transaction was possibly hosted through a major.

Another major continues to supply large quantities of Group I into South Africa, in this case around 10,000 tons loading out of Sicily.

West African shipping agency sources acknowledged the large Baltic and European cargo that will be en route to Apapa. Prices have not yet been released. Receivers in Guinea and Cote d’Ivoire have taken delivery of quantities of Group I that was loaded on board the vessel going into Tema with the supplies under the Ghana tender arrangements.

Prices are unchanged this week for Group I oils landing into Nigerian ports, with SN150 through SN180 assessed at $755/t-$785/t, SN500, SN600 and SN650 at $830/t-$855/t, and bright stock at $920/t-$940/t. As an indication only, SN900 ex the Baltic is estimated to be landed into Nigeria at $865/t-$895/t.

These prices pertain to parcels in excess of 10,000 tons of Group I delivered on a CFR or CIF basis into Apapa port, in 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.