15 October 2013 12:11 [Source: ICIS news]
LONDON (ICIS)--The European export base oils market is at a stand-off, with buyers and sellers not prepared to budge on price, sources said on Tuesday.
“The market is like a dog chasing its tail. Refiners don’t have margin so they drop production and the market becomes short. The sellers then want a premium but the seller can't sell,” said a trader.
“The problem is we need the refineries to have margin else we don't go anywhere. When this happens we will get some balance again,” the trader added.
As with the rest of the base oils sector, a “stand-off” between buyers and sellers was frequently mentioned in the export market.
A producer in the Mediterranean said: “The market is very quiet. I have base oils to sell but don’t see much interest – or I sell at a low price. I am not willing to sell at a discount on the ICIS low level. I prefer to keep my product.”
ICIS European export prices are $980-1,000/tonne (€725-740/tonne) FOB (free on board) for SN (solvent neutral) 150, and $1,010-1,030/tonne FOB for SN500. Brightstock FOB is quoted at $1,145-1,180/tonne.
The producer believed that the market situation would eventually change and volumes would start moving again, but when this might be, it was not sure.
“Moving into November – I really don't know – it will reach a point where buyers need to buy and sellers need to sell – this situation won't last forever.
“It’s difficult to say what will be the future,” the producer concluded.
In relation to the so-called "stand-off" in the base oils market at the moment, a buyer said: “Refiners keep moaning and I think they want prices to go higher, but they can’t because demand is so weak. People are running at a minimum.”
The buyer described the supply of SN150 as “abundant”, SN500 as “balanced” and Brightstock as “tight”.
($1 = €0.74)
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