Traders recounted calls from Group I suppliers offering availabilities for prompt November lifting with exceptionally attractive prices, some well below market levels. This is a reversal of normal trading practice, where traders contact sellers to check availabilities, prices and dates.

Crude oil and feedstock prices steadied this week at levels lower than recent highs. Dated deliveries of Brent traded at $77.20 per barrel for December front month, around $2.50 below last weeks post. West Texas Intermediate dropped around $2.00 to $67.15/bbl, now also for December front month. ICE LS gas oil was little changed from last week, recording a price of $709 per metric ton for November front month. These prices were established from London ICE trading late Monday.

Europe

Spot prices for Group I exports from Europe are reservedly assessed as stable but are clearly facing downward pressure. Producers and other suppliers are doing their best to hold prices up but are being undermined by discounts.

Light solvent neutrals are assessed at $685/t-$710/t. SN500 and SN600 at $710/t-$735/t and bright stock at $885/t-$910/t. The discounting referred to above reduces those prices by $30/t-$50/t, but without confirmation of deals being done at those new levels, it seems prudent to stand pat.

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

Prices for Group I sales within Europe remain unchanged, but again will be face downward pressure when values for November are set. Whether they drop will become apparent after Nov. 1, although blenders in the Benelux countries and the United Kingdom said they are seeing lower numbers. As reported last week, some companies say they are reticent to switch from Group I to Group II because they expect Group I oils will cost much less. In addition, some blenders have significant bright stock requirements, and Group I suppliers are not keen to supply that grade unless buyers also take quantities of solvent neutrals.

The differential between local and export prices is unchanged this week, with the former being 45/t-100/t higher. The lower end of this spread pertains to bright stock whilst the differential for other grades is substantially higher.

Group II prices are beginning to dip, though some sellers insist they are still selling at the same levels as September and October. The picture is muddied however, as some buyers reported receiving lower prices while others say they have not.

Prices for 100 neutral, 150N and 220N are at $875/t-$920/t (750/t-790), while500N and 600N are $955/t-$975/t (820/t-835), all on an FCA basis or for parcels delivered by truck or barge.

The Group III segment recently appeared primed for markups but has reversed course and gave way to decreases this week. Buyers are suggesting that Group III grades may be over-supplied again, especially those oils that carry only partial slates of finished lubricant approvals.

Prices for those grades appear to have dipped around 5/t-10/t, to 760/t-770/t ($880/t-$890) for 4 centiStoke grades, to 770/t-780/t ($895/t-$905) for 6 cSt and to 780/t-785/t ($900/t-$910) for 8 cSt, all on an FCA basis.

Prices for Group III oils bearing full slates of ACEA and European OEM approvals are maintained this week at 820/t-840/t for 4 cSt, 840/t-885/t for 6 cSt and 825/t-840/t for 8 cSt, all FCA Antwerp-Rotterdam-Amsterdam. Prices for bulk cargoes delivered to larger users may be considerably lower.

Baltic and Black Seas

Baltic traders with increasing quantities of Russian exports to sell are looking for new markets and have placed a shipping inquiry for a cargo to the United Arab Emirates or the West Coast of India. With new U.S. sanctions about to be unleashed on Iran, Baltic supplies of SN150 and SN500 may be just the answer for receivers in those regions, which historically has depended on Iranian supply.

Shipments to destinations such as West Africa, which have been much more common for Baltic trade, have ceased for the moment, and receivers and traders said a resumption will require price cuts. Refinery gate levels for Russian exports have been held high based on claims of elevated raw material costs, though crude and feedstock prices are now falling back.

Routine movements of spot supplies were reported for Antwerp-Rotterdam-Amsterdam and the U.K. A large number of blenders depend on these grades since the closing of plants in Northwestern Europe.

FOB prices are appear to have fallen and are assessed at $625/t-$650/t for SN150 and $645/t-$675/t for SN500. SN900 FOB prices calculated on a netback basis from CIF offers are at $710/t, while bright stock ex southern Baltic locations is now at $845/t-$865/t, FOB.

Turkey still has not recovered from its economic downturn, and commentators say it may take six months or longer things to improve. Some Turkish blenders use local base oil that can be purchased in lira, but others rely on imports, and prices for those have been pushed so high by exchange rates that blenders cannot use them to produce competitively priced finished lubricants. Some report that other Black Sea and East Mediterranean operators are now supplying their customers.

No Group I cargoes are reported moving from mainland Europe into traditional destinations of Gebze and Derince, Turkey, and few Russian cargoes are loading out of Azov, Russia, for the same receivers. One inquiry was placed for a large quantity of Group III base oils to move into Turkey from the Middle East Gulf, but it is unclear how such a cargo could be financed in the current situation.

Prices for Russian exports through the STS operation in Kavkaz, Russia, which has confirmed a 15,000-ton cargo loading for the U.A.E. and Singapore, are at $575/t for SN500 and $560/t for SN150.

Middle East Gulf

One interesting Red Sea report describes a 1,500-ton cargo moving from Saudi Arabia to Naples, but it may be too small to work economically; a previous such shipment carried 4,000 tons. It is believed that large quantities of Group I and Group II base oils loading out of Yanbual Bahr and Jeddah, Saudi Arabia for India and the U.A.E. will depart soon and are schedule to be discharged during the first half of November.

No Iranian base oil cargoes have been identified moving out of the southern Middle East Gulf ports, and with the U.S. sanctions about to hit Iranian exports next week, receivers are considering alternative supplies for Group I base oils. Sources in the Baltic and Mediterranean seas are being reviewed along with others from the U.S. and the Black Sea. With some cargoes already fixed into the U.A.E., provisions are clearly being made. More local supplies are also being assessed from Pakistan.

Sources in the U.A.E. have also indicated that prices being offered are much lower than Iranian levels. Still Iranian sources are adamant that the new sanctions will not curb exports of base oils from Iranian ports.

Prices for the various oils being imported into the U.A.E. are estimated to be around $750/t but may vary by $25/t-$30/t depending on source and quality.

Notional FOB prices for Group III exports from Al Ruwais, U.A.E., and Sitra, Bahrain, are unchanged this week. Slight downward adjustments may have been made due to lower selling prices in various markets, but FOB levels reported here will not be changed until cargoes are delivered into Europe, the U.S. and India. Adnoc appears to be lining up another round of supplies from Al Ruwais to the Far East and India, with parcels of 6,000 to 10,000 tons being considered in each case.

Notional FOB levels for Group III oils from Al Ruwais and Sitra with partial slates of approvals are $810/t-$845/t for 4 and 6 cSt. Fully approved oils sold by Neste from Sitra and bound for Europe and the U.S. are estimated to be priced at $865/t-$895/t for 4, 6 and 8 cSt. The same 8 cSt material being exported to India or Far East destinations will produce lower netbacks due to significantly lower local selling prices.

Notional FOB prices are estimated on a netback basis using published freight rates, advised local selling prices and information from various sources about bulk CIF/CFR cargo prices.

Group II base oils offered to Middle East Gulf receivers from Far East and Red Sea suppliers are once again competing against the ‘domestic’ supplies of Group II available ex Yanbu. Cargoes for break-bulk operations where smaller parcels are sold locally on an FCA basis or delivered by truck or flexitank are also being fixed, but Middle East Gulf Group II prices appear stable at this time.

Values for fully approved 100N, 150N and 220N are estimated at $1,055/t-$1,095/t, while 500N and 600N are at $1,125/t-$1,165/t. These apply to cargoes of less than 25,000 tons delivered to Middle East Gulf locations and then sold in quantities of up to 300 tons.

Africa

North and East Africa have seen a number of Group I cargoes moving from European Mediterranean sources into ports such as Mohammedia, Morocco, Alexandria, Egypt and Mombasa, Kenya. The latter usually sees imports of smaller quantities of base oils in flexies and drums, but this 5,000-ton supply may be a trade between a major trader and one of its affiliates.

West African sources said traders are looking at a Mediterranean-sourced Group I cargo for November. The quantity is reputed to be around 10,000 tons of all grades, and this cargo may not be destined for Nigeria, perhaps consisting of around 5,000 tons for Ghana plus quantities to be delivered into Guinea and Cote d’Ivoire. The 13,000-ton cargo ex northwestern Europe and the Baltic is on the water and moving into Apapa port in Lagos around mid-November. No new news has been received on the progress of a Baltic cargo of some 20,000 tons.

In the absence of new deals, offered prices for Group I oils into Nigeria are unchanged this week at $695/t-$745/t for solvent neutrals between SN150 and SN180, $730/t-$775/t for SN500, SN600 and SN650 and $925/t-$965/t for bright stock. SN900 ex Baltic, as an indication only, is assessed to have fallen to $795/t-$825/t on a CIF/CFR basis, due to FOB discounting.

These prices are for Group I parcels of at least 10,000 tons 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.