12 November 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--Export prices in the European base oil market are likely to decrease before the end of the year, traders said on Tuesday.
Although assessed prices have been stable since September, sources have noted a growing downward pressure in the last few weeks. During this time, price discussions have progressed from taking place around the high of the ICIS ranges, to within the ranges and then around the low.
Now, there are fairly widespread expectations that a purchase tender from Venezuelan state energy firm PDVSA will be awarded at a discount to the ICIS low.
A similar tender was awarded two weeks ago at prices understood to be equivalent to the ICIS low.
There is understood to be fairly high competition for the second tender, with a large number of offers being submitted, and observers therefore expect the price to be lower than that of the first tender.
With the end of the year approaching, some producers may see this new tender as a useful mechanism by which to lower their inventories before the end of the year, and so may be willing to offer lower prices.
Market players generally aim to end the year with low inventory levels, and therefore low working capital, so as to incur lower taxation.
European export prices are currently assessed as follows: SN150 at $980-1,000/tonne FOB (free on board), SN500 at $1,010-1,030/tonne FOB and brightstock at $1,145-1,180/tonne FOB.
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