2 February 2016
Base oil consumers in Europe should accept that feedstock prices are not the only determinant of price, as the domestic market remains stable yet again, according to a distributor.
Group I domestic prices are stable and consumers remain dissatisfied that the losses incurred in the crude oil market since October last year have yet to be reflected in the base oil market.
There is an acceptance that brightstock is tight, but in regards to the other grades it was suggested that refiners are playing up the impact of the refinery closures in northwest Europe – Shell and Kuwait Petroleum – as a means of protecting prices on the other grades.
In the absence of any obvious tightness, buyers believe prices should fall in reflection of upstream decreases.
Yet there are few signs of any excess material in Europe and, regardless of whether or not this is linked to the refinery closures, there is little room for lower prices, sellers said.
A distributor said: “Consumers have their head in the sand a bit on that … they’re obsessed with crude affecting everything.”
European domestic Group I prices have not changed since early September. SN150 is at $650-710/tonne, SN500 is at $715-770/tonne and brightstock is at $925-950/tonne, all FOB (free on board) NWE (northwest Europe).