Mideast base oil prices fall on lower discussions, European cargoes

01 August 2012 11:19  [Source: ICIS news]

SINGAPORE (ICIS)--Prices of Group I base oils in the Middle East fell on the back of softer discussion levels in line with the overall decline in the Asian market and offers of lower-priced European cargoes, market players said on Wednesday.

Prices of SN150 cargoes fell by $75-95/tonne (€61-77/tonne) CFR (cost & freight) UAE (United Arab Emirates) to $955-1,015/tonne CFR UAE, while prices of SN500 cargoes fell by $55-65/tonne CFR UAE to $995-1035.tonne CFR UAE during the week ended 26 July, according to data from ICIS.

Iranian major Iranol was heard to have concluded a deal for 21,000 tonnes of Group 1 base oils for prompt loading to buyers in the UAE, according to market players.

The deal includes 6,600 tonnes of SN600 at $925/tonne FOB (free on board) BIK (Bandar Imam Khomeini), 5,800 tonnes of SN500 at $950/tonne FOB BIK, 4,900 tonnes of SN 150 at $920/tonne FOB BIK, and 3,500 tonnes of SN650 at $925/tonne FOB BIK, they said.

Meanwhile, Russia-origin Group 1 cargoes were offered at $980/tonne CFR UAE, but there was no buying interest because there is a preference for cargoes from Iran, according to market players.

“European product is of high quality, but there are some colour differences from what blenders in the UAE are used to, so interest is weak,” a trader said.

India had purchased large volumes of European cargoes at around $980/tonne CFR India two weeks earlier, causing buyers in the UAE to put pressure on Iranian refiners.

“Some blenders who are able to accept the specifications of the European cargoes may consider buying them in a week or two, if there are offers. This may cause the prices to fall further,” another trader said.

Iranian major Sepahan has not lowered its selling ideas of SN500 to the buyers’ levels at the low-to-mid $900s/tonne FOB Iran. Sepahan’s list price for SN500 product was $1,100/tonne FOB Iran as of 26 July.

“We don’t see a real need to lower our prices now. We prefer to wait for prices to stabilise before we make a decision to do so,” a source from Sepahan said.  

($1 = €0.81)

By: Andrea Heng
+65 6780 4359

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