01 February 2013 09:37 [Source: ICIS news]
By Mahua Chakravarty
SINGAPORE (ICIS)--Spot prices of SN500 Group I base oils in the Middle East are likely to firm further, with sellers nudging up offers on expectations of a pick-up in demand, market sources said on Friday.
On 31 January, SN500 prices were assessed at $920-940/tonne (€681-696/tonne) ex-tank Sharjah and at $900-920/tonne CFR (cost and freight) UAE, up by $10-25/tonne from the previous week. SN500 prices have gained about 9.6% from a month ago, according to ICIS data.
“Prices have gone up as crude oil prices have [also] increased,” said an Iranian producer.
Brent crude are currently trading near its highest level since October last year at around $115/bbl, buoying up base oils prices.
Iran is a major producer and supplier in the Middle East, with 90% of its base oils exports landing in the UAE.
An Iranian producer was heard selling SN500 for February loading at $900/tonne on a free-on-board (FOB) basis, $15/tonne higher than Sepahan Oil’s $885/tonne FOB Iran offer.
Sepahan Oil, which is one of the major base oils producers in Iran, has raised its FOB price quotes for base oils this week by $15/tonne from the previous week, while its CFR UAE offer increased by $10/tonne to $920/tonne.
“The expectation for the next two weeks is that there will be price increase of $20-30/tonne [for SN500],” said a source from another Iranian producer.
Buyers in the UAE are expected to procure spot base oil cargoes this month to replenish their inventory before Iran goes on a long break for Nauroz – the Iranian New Year in March, a Dubai-based trader said.
Iran will be on holiday for about two weeks from 20 March, but market players in the country are usually away for almost a month, market sources said.“By the end of February, $900/tonne FOB Iran [for SN500] is achievable. [Market] sentiment is also getting better and there are enquiries,” the Dubai-based trader said.
After a sluggish trend in mid-January, buying enquiries emerged this week from countries like Malaysia, India, UAE, Kuwait, Qatar, Turkey, Armenia and Azerbaijan, according to base oils producers in the Middle East.
($1 = €0.74)
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