Downward pressure weighs on Europe, Baltic and Black Sea base oil export markets

Source: ICIS News


LONDON (ICIS)--Export values for Europe, the Baltic Sea and Black Sea all edged down late on Tuesday on the back of softer price ideas, with players noting a lack of interest from buyers, if not resistance to higher levels.

- Export markets pressured by improved supply, lower price ideas

- Discounts of varying levels in Baltic, Europe export markets

- Outlook clouded by upstream volatility, upcoming turnarounds

European export market values for SN150, SN500 and brightstock were lower by $5/tonne this week, amid talk of discounts of varying levels.

SN150, SN500 and brightstock were at price levels of $670-715/tonne FOB (free on board) Europe export, $690-740/tonne FOB Europe export and $940-970/tonne FOB Europe export respectively.

One seller said it had received a bid for SN500 at a significant discount but had declined to sell the product at this level and said it was happy to store the product until it received a better offer.

SN500 is believed to be the lengthiest grade in the European export market when compared with availability of SN150 and brightstock.

There was further talk of substantial discounts for brightstock in Europe but this could not be widely confirmed.

Arbitrages were open from the US and Asia, with Egypt said to be sourcing brightstock volumes outside of Europe.

One player said that this meant European prices were on a downward trend.

That said, upcoming bouts of planned maintenance at some refineries in Europe in the second half of the first quarter and during the second quarter could serve to tighten the market, with one source expecting prices to rebound.

Baltic Sea export market numbers were also lower by $10-20/tonne depending on the grade on the back of lower price ideas.

SN150, SN500 and SN900 values were at $560-620/tonne FOB Baltic export, $600-650/tonne FOB Baltic export and $685-745/tonne FOB Baltic export respectively.

There was talk of comparatively healthier supply of SN500 versus other grades and a lack of interest from buyers.

That said, some saw values gaining an element of support from logistical issues on Russian railways, with players experiencing difficulty sending product to Baltic ports and some traders said to be still waiting for the delivery of volumes they ordered back in November.

SN900 price ideas were heard into the low $600s/tonne FOB Baltic Sea export level but could not be widely confirmed. Competition from US material in Africa had eroded some export opportunities for SN900 and prices were believed to be coming down as a result.

Healthy availability and buyer resistance to firmer prices resulted in decreases in the Black Sea export market this week.

SN150 and SN500 were down by $20/tonne amid talk of decreases of between $10-30/tonne.

Values for SN150 and SN500 were at $540-610/tonne FOB Black Sea export and $610-670/tonne FOB Black Sea export respectively.

Some players saw tighter conditions in the Black Sea region, with prices holding steady, but most market participants noted a downward price trend.

Whether the downward trends seen this week will be sustained is unclear, with upstream volatility and the looming refinery maintenance season clouding market outlook.

Pictured: Saint Petersburg harbour; logistical problems on Russian railways have delayed base oils deliveries to the Baltic
Source: Mito Images/REX/Shutterstock 

Focus article by Sarah Trinder