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The Availability of Russian Base Oils Improves in September

The availability of Russian base oils for export loading has improved after a restriction in July and August, as refineries have begun to run at full-scale and the attractiveness of export sales has improved due to the weaker Russian ruble, according to DYM Resources estimates.

The Russian currency dropped by 8.6% between July 30th and August 28th, making domestic sales less competitive against export loadings. This could support export sales of finished lubes as well.

Rosneft and Naftan underwent maintenance at their base oils units during the summer, which limited supplies from June to August. Both producers offered healthy volumes for September loadings. Gazpromneft and Lukoil also have base oils available for export in September, according to market participants. Tatneft had maintenance planned for September but decided to postpone it, according to producers of export Group III 4 cSt and Group II 2.5 cSt.

In September, maintenance will only take place at one base oils unit in Russia: The Angarsk refinery, which mostly supplies the Chinese market via railroad, will have turnaround. The refinery exports up to 10,000 tons per month.

Demand Improves After The Holiday Season

The demand for base oils has improved after religious holidays in Muslim countries have been completed. The European market is also improving for September-October orders after the traditional slow-down during the summer months.

Feedstock prices began to rise in the second half of August after dipping in July and the first two weeks of August. The growing crude oil price supports strong base oils prices. The Brent price increased by 5USD per barrel or 7% between August 15th and 28th, and reached 75,78 USD/bl.

Russian base oils are supplied to Turkey, Europe, Nigeria, Middle East, and other markets.

DYM Resources is a trading firm specialized in base oils, waxes, petroleum coke, and bitumen trading. The company offers a cost-effective solution for deliveries from Russia, Belarus, Turkmenistan, Uzbekistan, and Europe. DYM Resources is experienced in flexi-tanks exports. For any enquiries, feel free to contact us via our website.

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Base oil prices

Base Oil Prices Are Forecast Strong, Bright Stock Weak

European base oil prices are likely to stay strong long-term and are expected to trend higher in the first half of 2017 based on higher feedstock costs, according to Argus Base Oils senior analyst Alvin Chew.

Chew delivered these insights at the UEIL Conference in Berlin in October.

In the fourth quarter, base oil prices are normally under pressure, but this year refinery maintenance in Europe and strong demand from Asia are bolstering prices.

From September to October, maintenance on base oil units at the Omsk and Angarsk refineries in Russia, Naftan refinery in Belarus, Lotos in Poland, Eni in Italy and Sepahan in Iran impacted supplies of Group I base oils to the market.

SN 500 prices look especially strong compared to SN 150, as there is more competition in light grades like 2 cSt and 4 cSt.

About 8.5 million tons per year of new base oil capacity came online between 2014 and 2016, mostly Group II and III, and only 2.85 million tons per year of Group I base oil units closed, according to Argus Base Oils numbers.

Overpriced Bright Stock in the EU

“European Bright Stock prices at the same time may decrease as they look overpriced,” Chew said. “The historical average price strength for Bright Stock is 1.67, while now it is 2.31. There is no fundamental support for such a strong premium.”

One of the key reasons to put pressure on European prices is U.S. export prices for Bright Stock and SN 500 are cheaper than European export prices. By the end of October, the SN 500 prices were discounted against the U.S. by $50 per ton, while the Bright Stock discount to the U.S. was $115 per tons, according to Argus Base Oils assessments.

DYM Resources supplies Group I base oils such as SN 150, SN 500 and Bright Stock from a number of locations globally. For inquiries, please do not hesitate to contact us at info@dymresources.com or online.

DYM Resources is headquartered in Berlin, Germany and trades base oils, slack waxes and petroleum coke along with other niche oil products.

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