The exception is bright stock, which remains relatively tight around the European market and still commands a higher price.

Group II prices are also under pressure – partly because of the pull of Group I. Buyers harp on differentials between the grades when they widen too much.

Group III prices are moving lower after rallying the past couple months when shipping detours around South Africa raised transportation costs of cargoes from the Middle East Gulf and Asia-Pacific to Europe. Initially these costs were passed on to buyers, but an oversupply situation is undercutting that dynamic.

Crude oil and feedstock prices are relatively stable on a week by week basis, but rumors are circulating that significant declines could be in store in coming months. OPEC+ members appear spooked about the potential implications on their budgets and economies.

Dated deliveries of Brent crude came in almost flat this week at $72.85 per barrel, for January front month settlement. West Texas Intermediate was also little changed at $68.70/bbl, still for December front month.

Low-sulfur gasoil prices moved slightly higher to $683 per metric ton, now for December front month. All of these levels were obtained from London ICE trading late Nov. 18.

Europe

This week sees further reports of quantities of light and heavy neutrals being offered at extremely low prices. There are also reports of Group I imports. Tupras in Turkey had a sale tender for a cargo quantity reputedly purchased by a known trader. The sale was made on an FOB basis, and although the cargo quantity is not specified, it was considered to be around 6,000 tons in total, with three grades being loaded: solvent neutral 150, SN500 and bright stock.

This cargo was loaded out of a Marmaris port and was sold on a CIF basis to ENI in Livorno, Italy. Production of Group I base oils ceased at this refinery earlier this year, but ENI are still producing their own branded lubricants and will continue to purchase Group I grades to cover requirements. CIF prices reported were $930/t for SN150, $955/t for SN500 and $1,240/t for bright stock. The SN500 price is surprisingly low compared to other selling levels heard around the Mediterranean.

The sale of a small quantity of SN150 from a Spanish producer has been confirmed, being bought by a trader and sold into Turkey. Apparently the producer needed to speedily move this quantity out of tank and was prepared to offer the quantity to any buyer willing to act fast to take the quantity out of tank within a day or so. A vessel was found and the deal was completed at a price close to $750/t FOB.

Prices in European domestic markets are trending lower, and with demand remaining dull across main markets in the region, hopes of an uplift seem to be a long way off. Eastern European availabilities from Poland and Hungary see SN150 values falling to around $935/t and SN500 to $995/t, on an FCA basis. Mediterranean prices are also showing lower at around $930/t-$950/t for SN150, $990/t-$1,015/t for SN500 and SN600 and $1,185/t-$1,225/t for bright stock.

Pan European FCA euro prices are lower this week at €920/t-€945/t for SN150, €960/t-€1,000/t for SN500 and SN600 and €1,175/t-€1,235/t for bright stock, the latter depending on quantity and availability.

The dollar exchange rate versus the euro was down this week to $1.05707 on Monday. The average price differential across all grades, between Group I exports from Europe and Group I sales within the region is unchanged at €20/t-€45, excepting the very low export levels heard last week.

European Group II prices are starting to come under price pressure, with suppliers moving levels downwards to accommodate requests from buyers. European Group II prices are held steady this week, with levels remaining assessed between €1,100/t-€1,125/t for 110 neutral and 150N, €1,135/t-€1,165/t for 220N and €1,185/t-€1,225/t for 600N. These prices apply to a wide range of Group II base oils from Europe and from the United States, the Red Sea and Asia-Pacific, imported in bulk.

The European Group III market is now described as oversupplied, with large quantities of all grades in storage. The attempts to hike prices to reflect extra costs involved in shipping have been eroded over the past few weeks, with distributors keen to move material and therefore willing to give discounts.

In September prices had been moved higher where possible to account for shipping cost increases being incurred due to re-routing around the Cape. here small increases have all but been eroded with levels gravitating back down to where they were previously.

With demand failing across Europe prices remain unchanged this week, with distributors commenting that they do not have much wriggle room left before moving to a loss making situation. Producers have been asked to assist with FOB prices where possible which ultimately will affect netbacks. Four centiStoke material is being offered from one seller at €1,155/t. Other prices are heard higher, between €1,230/t-€1,240/t on an FCA basis ex Antwerp-Rotterdam-Amsterdam for 4 cSt material and €10/t higher for 6 cSt.

Strangely there have been reports that 4 cSt availability could be tightening, but with the recent cargo arrivals in tank, it does not seem feasible that this could be the case. Some sellers only deal with their regular buyers, and one South Korean seller is anxiously awaiting the arrival of a cargo that should come into Rotterdam prior to year end.

European prices for Group III oils with partial slates of finished lubricant approvals are at €1,155/t-€1,265/t for 4 and 6 cSt and €1,235/t-€1,320/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam and Northwestern Europe.

Prices for rerefined Group III grades are unchanged at €1,135/t-€1,175/t for 4 and 6 cSt, on an FCA basis ex rerefinery in Germany.

Group III oils with full slates of approvals remain at a premium, priced at €1,775/t-€1,810/t for 4 and 6 cSt and €1820/t-€1835/t for 8 cSt, on an FCA basis ex hubs in Antwerp-Rotterdam-Amsterdam, Northwestern Europe and Spain.

There may be scope for a supplier who had full approvals a year or so back to regain them. This may alter the dynamics of the fully-approved market, introducing increased competition and diluting the market as it stands right now.

Baltic and Black Seas

Drawing blanks on information for shipping out of the Baltic Sea for Russian cargoes is getting more difficult. Sources which used to produce a shipping list, not longer provide this service, perhaps due to the same problems as this report. Since the ports of Riga and Liepaja are not longer used for the export of Russian export barrels, shipping agents do not become involved representing shipping companies as before.

FOB prices in respect of Russian SN150 and SN500 ex St Petersburg or Vyborg are assessed from prices offered into Nigeria or Singapore since cargoes for both destinations still load from the Baltic.

Working backwards from delivered prices into known ports, FOB numbers are assessed with levels around $765/t-$785/t in respect of SN150, with SN500 between $795/t-$820/t. SN900 blended specifically for Nigerian receivers is assessed at around $865/t. Some sources have suggested lower numbers, but on evidence these levels are acceptable.

Baltic base oil reporting has become extremely difficult, since only Russian material is being exported from this location. European and other base oils are moving into the Baltic ports in Lithuania and Latvia, where previously Russian Group I material was the staple blendstock. Quantities of both Group II and Group III base oils are being used more now in the Baltic States, than in previous times with blenders moving towards premium base oils with new formulations.

The Tupras tender cargo has been sold to either one or perhaps two traders, who in turn have sold the cargo into Italy, to ENI in Livorno. The trader who bought the last Tupras cargo is involved in the purchase of the present parcel, but the close relationship with another trader based in Dubai, could be the answer to ENI taking the cargo.

Russian imports from the Baltic and Black Sea ports continue to dominate the Turkish base oil market, with prices CFR lower, and estimated to be around $765/t-$780/t for SN150, with SN500 between $775/t-$790/t, basis CFR Gebze.

Tupras’ local prices for the Turkish market are unchanged this week, although there is uncertainty about availabilities due to a fire at the company’s Izmir refinery. Prices are 35,462 lira per ton for spindle oil; Tl 31,593/t for SN150; Tl 33,721/t for SN500; and Tl 45,038/t for bright stock. Prices are in lira and are offered ex rack with a loading surcharge of Tl 5,150/t.

Group II grades have prices realigned at $890/t-$1,100/t for 110N,  220N and 350N and $1,300/t-$1,325/t for SN500. Higher spec 150N is also available at $1,150/t-$1,175/t. The latter grades were heard to have come from Luberef in Yanbu, but Yanbu does not produce a 500N, only 600N, hence more questions as to what exactly the offers relate. Group II base oils are imported from the Red Sea, the U.S., and South Korea. Russian Group II grades are reputedly being offered ex tank in Turkey, but there are questions as whether this is the case or not.

Partly-approved or non-approved Group III base oils on an FCA basis include Tatneft’s 4 cSt grade, which is priced around €1,220/t. Quantities of fully-approved Group III grades from Cartagena, Spain, continue to be delivered into Gemlik. Prices are unchanged at €1,960/t-€1,995/t, on an FCA basis.

Middle East

There are further reports of large cargoes of Group I and Group II base oils loading out of Yanbu and Jeddah, most of which will deliver product into the West Coast of India or Mumbai anchorage or United Arab Emirates ports such as Fujairah, Jebel Ali and Hamriyah, although there are vessel fixtures to Aqaba and Sudan. It is now known that Luberef have supplied Group II base oils into the Turkish market and that these stocks are being resold ex tank.

Sources in the U.A.E. are suggesting that Iranian base oils may be in short supply, but an announcement during last week was made regarding record quantities of rubber process oil going into the Indian market suggests production is still ongoing. 

Saudi Arabia and the U.A.E. are to forge closer ties with Iranian trade in an exchange of commercial information and data. This press release was rather surprising, especially regarding Saudi Arabia, who are Sunni Muslim, rather than Shi’i Islam which makes up around 90% of Iranians

Base oil trade to and from Middle East Gulf ports is being adversely affected by the potential Iranian situation P&I clubs considering declaring parts of Middle East Gulf a war zone, with all that that implies for insurance costs for vessels entering the Gulf.

Prices for imported Group I base oils arriving into Middle East Gulf ports, predominantly into U.A.E., are maintained at around $990/t-$1,020 for SN150, $1,035/t-$1,065/t for SN500 and $1,125/t-$1,180/t for bright stock, all on a CIF or CFR basis ex U.A.E. ports. These prices refer to imports from Thailand, India and Singapore. These price levels do not apply to Russian imports of base oils which are much lower.

Russian base oil cargoes continue to arrive into Hamriyah port in U.A.E., with the latest cargo for Nigeria which was transferred STS by the original vessel which had around 15,000 tons of Russian grades on board. The vessel delivering the cargo to Lagos had been reported at anchorage off Durban on Nov. 8 and is now in Durban port as of Nov. 17. Why the vessel is making a stopover actually in Durban port has not been established, but this report has been in touch with shipping agents in Durban and should have information for next week’s report.

Russian prices on basis Hamriyah anchorage, only for that cargo are estimated to have been around $785/t in respect of SN150 and $795/t for SN500 on basis arrival Hamriyah anchorage. SN900 could be priced at around $845/t. It is also assumed that the cargo was pre-blended to order, with the SN900 grade already bonded prior to the STS operation.

With freight cost of around $200/t from Hamriyah to Apapa, and a margin for the trader involved, prices delivered into Nigeria are estimated to be around $995/t in respect of the SN150, $1,025/t for the SN500, and $1,080/t for the SN900.

A Group III tender from Sitra refinery, from Bapco has been awarded to a European trader who is reportedly taking the cargo to the European market. The deal was completed on an index linked basis but using a rather unusual formula.The deal was done using the AG gas oil price plus $200/t. The gas oil price will be that ruling on date of bill of lading. On todays numbers this would price the Group III grades at $905/t, basis FOB, an extremely low prices for quantities of 4 centiStoke and 6 cSt base oils.

Having the extra costs of freight and extended voyage time, will bring the costs of moving the material to around $135/t from Sitra to Antwerp-Rotterdam-Amsterdam.

Group III base oil netbacks in respect exports from Al Ruwais in U.A.E. and Sitra in Bahrain to Europe are taken lower. Indication netbacks are assessed in a range between $1,125/t-$1,200/t for 4, 6 and 8 cSt Group III grades.

Netbacks for gas-to-liquids Group III+ base oils ex Ras Laffan, Qatar, are maintained between $1,295/t-$1,325/t. Cargo economics and cost allocation are not disclosed, hence netbacks are on an indication basis only. Netback levels are assessed from distributor selling prices minus estimated marketing, margins, handling and freight costs.

Group II base oils imported and resold ex tank in U.A.E., or often on a truck delivered basis around U.A.E. and Oman, have prices taken lower with levels now assessed between $1,600/t-$1,655/t for 100N, 150N and 220N and $1,685/t-$1,725/t for 600N. These grades will be sold in local U.A.E. dirhams, since the U.A.E. currency is pegged to the U.S. dollar. The highs of the ranges refer to RTW deliveries to buyers in locations in U.A.E. and northern Oman.

Africa

The large cargo of mixed base oils loading from Rotterdam and Fawley should either be loading presently or may have completed at the first port. Shipping agents in Durban have not yet supplied details of the cargo or ETA in South Africa.

West African news is that the cargo of 9,000-10,000 tons of Group I base oils from ExxonMobil which would have loaded from Fawley is due to discharge in Tema. The vessel will then sail to Abidjan, and finally Conakry to complete the discharge. 

In Nigeria the exchange rate with the naira/dollar has been relatively stable over the past few weeks but is still causing problems for sellers if they are paid in naira. The rate is now 1,710 naira. The unpredictability of the rate makes changing naira into dollars difficult as the rate can move on a daily basis.

Russian base oils which are in tank, continue to affect the base oil market in Nigeria. The Russian prices have becoming the norm, with international traders offering barrels from Europe and the U.S. being expected to compete with Russian prices. 

Prices CFR Apapa in respect of traders’ prices from U.. or perhaps Europe, have to be more competitive to counter against Russian prices. With an edge on quality and specifications, traders may not have to compete at the Russian levels, but will have to justify higher prices, particularly if bright stock will have been used to blend the SN900.

Levels could be around $1,095/t-$1,125/t for SN150, $1,125/t-$1,160/t for SN500 and around $1,185/t-$1,200/t for SN900. Russian and U.A.E. delivered prices for Russian barrels are at $995/t for SN150, $1,035/t for SN500 and $1,085/t for SN900, basis CFR Apapa.