02 July 2013 17:49 [Source: ICIS news]
LONDON (ICIS)--The Turkish base oils market faces the same market fundamentals in July as it experienced in June with prices unlikely to change, sources based around the Black Sea said on Tuesday.
“The feeling in the market is that it’s a bit of a flat-liner. There’s not much change, but the price is too high, you can’t do anything on this basis - you can’t export,” a trader with a terminal in Turkey said.
The trader also spoke about both the weak Turkish lira and the depreciation of the Indian rupee dampening demand.
The India rupee hit a record low last week amid concerns that the Federal Reserve will end its US stimulus.
Although the majority of sources failed to see any difference in the dynamics of the Turkish market from June to July, there were some who believed volumes might start moving again if prices were to come down.
“The market is starting to get a bit better, but the problem is still we can't find the price to match our local market. Most of the cargoes are from Europe but at the high ICIS quotation and nobody is offering lower numbers,” said a Turkish buyer.
SN150 and SN500 FOB (free on board) Black Sea prices are currently at $895-925/tonne (€689-712/tonne).
Political unrest continues to impact on business and industry confidence and the weak Turkish lira remains a major concern.
In addition to varied market fundamentals impacting on the Turkish base oils market, the reported postponement of the introduction of a new licensing system for base oils in the country continues to weigh on demand, sources said.
The new system was expected to be implemented 1 July, but this date has been revised to 1 January 2014.
According to industry information, under the new system, base oil importers will need to apply to the EPDK (Republic of Turkey Energy Market Regulatory Authority) for base oil cargoes planned for Turkey.
Licences will be issued according to buyers’ finished-lubricant production capacity and the amount of base oils they already hold in stock.
Only lubricant producers will be able to apply for the licences, but base oil traders will be able to use them on behalf of the buyer.
According to market sources in the Black Sea, the new regulation has been delayed because the necessary notice period is too short to prepare the required documentation and paper work.
($1 = €0.77)
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