23 August 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European base oil solvent neutral (SN)150 and SN500 export prices have fallen $50/tonne (€35/tonne) this week because of rising supply and sluggish demand, markets sources said on Tuesday.
In order to move product in a slow market, European suppliers are indicating lower prices.
For several weeks, buyers and traders expected prices to come down, citing slow offtake, a lack of arbitrage opportunities and price declines upstream.
However, producers held prices up at prevailing levels.
As August draws to a close, supply and demand has proved to be decisive as faced with mounting stocks and low buying interest, supplier resistance has ended.
“We are one of the people offering lower,” said a northwest European producer. “We have seen a slower domestic market in July and August.”
The producer dropped its price by $80/tonne in one case, to secure export business. “Supply and demand is the main thing.” the producer added.
Another producer confirmed it would accept a reduction of $35-50/tonne on its existing SN150 and SN500 price in order to move some product.
In the week ending 23 August, ICIS assessed SN150 and SN500 FOB (free on board) ?xml:namespace>
Sources were unclear how long this downtrend would last or how far prices would need to fall to generate better demand.
($1 = €0.70)
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