19 February 2013 16:17 [Source: ICIS news]
LONDON (ICIS)--Base oil prices in the Baltic Sea market have firmed again this week as producers continue to increase their offers and are increasingly unwilling to compromise, traders said on Tuesday.
Although the market is not tight, there is no abundance of material either, given the recent period of plant maintenance and reduced operating rates.
And with feedstock prices increasing, replacement costs are also moving up, and producers’ margins are becoming squeezed again.
As such, they are holding firm on the prices they offer and are not prepared to negotiate discounts, traders said.
However, traders also say the increasing offers are being accompanied by a growing acceptance among buyers, particularly those in west Africa, that the market is firming.
“I think there’s growing confidence in the upward trend. Demand is there and there’s a finite amount of barrels,” said one trader.
Two traders have this week confirmed a deal to send SN500 and SN900 to west Africa, priced at $985/tonne (€739/tonne) FOB and $1,040/tonne FOB, respectively.
These traders and others are confident of further deals being done at similar levels, or higher, in the coming weeks.
($1 = €0.75)
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