10 September 2013 15:58 [Source: ICIS news]
LONDON (ICIS)--Black Sea base oils demand is currently muted because of a weak Turkish lira versus the US dollar, market sources said on Tuesday.
Year on year, the Turkish lira has lost 17% of its value against the US dollar, dropping by 12% since May this year.
The price for SN150 and SN500 FOB (free on board) Black Sea base oils has been determined by ICIS at $885-925/tonne (€664-694/tonne).
In relation to its demand, a trader said: “This week it's the same as last week. Demand is poor for the local market.
“There is demand, but prices are looking high because of the US dollar and petroleum prices in Turkey.”
A second trader, which imports base oils to Turkey, said: “It’s more of or less stable. Every day there is tension about Syria, then one day relaxed. It’s like a roller-coaster, up and down and people are indecisive.”
The importer added that it will not be purchasing material from November onwards because of new legislation to be implemented in Turkey in 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.
“Come November, we will all cut imports. This [September and October] will be the last two months we will be purchasing - normally we are two vessels a month - now we will be one vessel a month,” the second trader said.
The postponement of the introduction of a new licensing system for base oils in the country is weighing on demand. The new system was expected to be implemented on 1 July, but this date has been revised to 1 January 2014.
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.
A third trader source said it too had seen little buying interest in the market. “There is not much interest at all - the devaluation of the lira is making it [base oils] more expensive."
“We think there should be demand now. There is no demand; it’s quiet which is strange. I sold two vessels into turkey. I offered more material, but the buyers are not keen. Because of the dollar versus the lira there is not much activity locally,” the trader added.
($1 = €0.75)
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