01 February 2012 16:40 [Source: ICIS news]
LONDON (ICIS)--Recent nationwide strikes in Nigeria plus sectarian violence in the north of the country have contributed to lower-than-expected demand for base oil imports, European traders said on Wednesday.
A distributor who regularly sends material to Nigeria said most of the deals currently being negotiated were initiated back in December 2011, before the country was effectively paralysed by a week of national strikes in response to the removal of a government fuel subsidy on 1 January. Only very low levels of fresh demand are being reported.
The effect of the strikes has been compounded by sectarian violence in the north of the country, which is where the majority of base oil and lubricants end up, sources said.
"Life is not back to normal...and as well as the strikes there are the religious riots in the north. The market is down, demand is not as normal. There is some but it’s not what you would hope for," said one trader.
Nigeria is the largest importer of base oils in Africa, and much of the material which goes there originates in eastern Europe and Russia, via the Baltic Sea.
Sources also said that Nigerian buyers appear reluctant to accept price increases in the Baltic Sea market, which are gradually beginning to materialise after sustained and significant price decreases during the fourth quarter of 2011.
“[Buyers] are holding back on purchases because prices are going up. They still think $900/tonne (€1,184/tonne) [FOB (free on board) Baltic Sea] is okay. Now you have to pay more like $940-950/tonne,” said the trader.
($1 = €0.76)
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