Argus BaseOils

Argus Base OilsBase oil market prices, news and analysis

Global trade flows, freight rates, feedstock fundamentals 2-3Markets 4-21News and analysis 22-24Maintenace and market fundamentals 25-27

contents

Asia-Pacific $/t

Group I Low High

SN 150 ex-tank Singapore 1,040.00 1,075.00 -2.50


Bright stock ex-tank Singapore 1,225.00 1,265.00 +0.00

SN 150 fob Asia 945.00 975.00 -2.50

SN 500 fob Asia 1,040.00 1,070.00 -2.50

Bright stock fob Asia 1,140.00 1,170.00 -2.50

Group II

N150 ex-tank Singapore 1,065.00 1,095.00 -5.00


N150 fob Asia 985.00 1,025.00 -5.00

N500 fob Asia 1,090.00 1,135.00 -2.50

northeast Asia $/t

Group I Low High

SN 150 cfr 985.00 1,020.00 -2.50

SN 500 cfr 1,100.00 1,140.00 -5.00

Bright stock cfr 1,200.00 1,230.00 -5.00

Group II

N150 cfr 1,035.00 1,060.00 -2.50

N500 cfr 1,150.00 1,190.00 -5.00

India and UAe $/t

Group I Low High

SN 150 (LVI) cfr India 955.00 970.00 -7.50

SN 500 (LVI) cfr India 965.00 995.00 -7.50

Bright stock cfr India 1,195.00 1,220.00 -5.00

SN 150 (LVI) cfr UAE 935.00 950.00 -5.00

SN 500 (LVI) cfr UAE 955.00 970.00 -5.00

Group II

N150 cfr India 1,010.00 1,050.00 -5.00

N500 cfr India 1,135.00 1,170.00 -2.50

europe $/t

Group I Low High

SN 150 fob domestic NWE 1,040.00 1,070.00 -2.50


Bright stock fob domestic NWE 1,205.00 1,250.00 -2.50

SN 150 fob European export 950.00 975.00 -5.00

SN 500 fob European export 1,000.00 1,020.00 -5.00

Bright stock fob European export 1,140.00 1,165.00 -5.00

Group II

N150 fca ARA 1,075.00 1,115.00 +0.00

N600 fca ARA 1,125.00 1,160.00 +0.00

Group III

4cst fca NWE 1,294.00 1,356.00 -1.00

6cst fca NWE 1,301.00 1,363.00 -1.00

8cst fca NWE 1,287.00 1,349.00 -1.00

Russia and FsU $/t

Group I Low High

SN 150 fob Baltic Sea 890.00 910.00 -2.50

SN 500 fob Baltic Sea 930.00 950.00 -12.50

SN 150 fob Black Sea 900.00 915.00 -2.50

SN 500 fob Black Sea 875.00 915.00 -7.50

Us $/t

Group I Low High

SN 150 fob 921.00 970.00 -3.00

SN 500 fob 1,028.00 1,070.00 -6.00

Bright stock fob 1,103.00 1,126.00 -12.00

Group II

N100 fob 902.00 952.00 -3.00

N220 fob 939.00 988.00 -3.00

N600 fob 1,170.00 1,218.00 -15.00

Group III (domestic)

4cst 1,383.00 1,433.00 -3.00

6cst 1,411.00 1,462.00 -6.50

8cst 1,411.00 1,462.00 -6.50

naphthenic base oils

Pale oil 60 fob 1,087.00 1,132.00 -4.50

Pale oil 100 fob 1,029.00 1,076.00 -3.00

Pale oil 500 fob 1,003.00 1,046.00 -4.50

Pale oil 2000 fob 1,010.00 1,056.00 -2.50Global base oil prices have extended their fall. Demand has weakened as buyers work down stocks before the end of the year. Sellers in Asia-Pacific and US are offering supplies at lower levels in response. But the year-end price drop is slower than in recent years, reflecting support from markets like Turkey and China. Sellers have also been exporting supplies on a regular basis, limiting the surplus they need to clear.

crude oil and gasoil futures

Ice Brent front month ($/bl) 108.84 +1.85

Ice gasoil front month ($/t) 932.50 +21.00

oveRvIew

pRIces At A GLAnce

Copyright 2013 Argus Media Ltd

Issue 13-44 Friday 01 November 2013

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Argus Base Oils Issue 13-44 Friday 01 November 2013


fob Us export

SN 150 945.50

SN 500 1,049.00

N100 927.00

N600 1,194.00

fob european export

SN 150 962.50

SN 500 1,010.00

N150 fca ARA 1,095.00

N600 fca ARA 1,142.50

cfr UAe (LvI)

SN 150 942.50

SN 500 962.50

fob Black sea

SN 150 907.50

SN 500 895.00

fob Baltic sea

SN 150 900.00

SN 500 940.00cfr ne Asia

SN 150 1,002.50

SN 500 1,120.00

N150 1,047.50

N500 1,170.00

fob Asia

SN 150 960.00

SN 500 1,055.00

N150 1,005.00

N500 1,112.50

cfr India

SN 150 (LVI) 962.50

SN 500 (LVI) 980.00

N150 1,030.00

N500 1,152.50

ARGUs mARket mAp $/t

Freight rates (Us) * $/t

Route 1,000t 3,000t 5,000t 10,000t

US Gulf coast-Rotterdam 80.00 60.00 55.00 46.00

US Gulf coast-Brazil 107.00 87.00 80.00 70.00

US Gulf coast-Far East 130.00 105.00 97.00 87.00

US Gulf coast-India 125.00 105-110 97.00 90.00

* rates for September 2013, provided by SPI Marine (www.spimarineusa.com)

Freight rates (Asia-Pacific) * $/t

Route 3,000t 5,000t

Singapore-central China 55.00 49.00

Singapore-Indonesia 33.50 30.50

Singapore-Thailand 34.50 31.50

Singapore-WC India 52.00 47.50

Singapore-Japan 64.00 58.50

Japan-central China 33.00 28.00

Mideast Gulf-WC India 41.00 32.50

Mideast Gulf-central China 71.00 65.50

South Korea-US Gulf coast 94.50 86.00

South Korea-WC India 78.00 69.50

South Korea-Singapore 34.50 30.50

South Korea-Japan 25.00 22.00

South Korea-central China 27.00 23.00

South Korea-Taiwan 28.00 23.00

South Korea-Europe 144.00 127.00

* rates based on one port loading/one port discharge

* rates provided at market close on 24 October by SPI Marine (www.spimarineasia.com)

Arbitrage opportunities - Group I $/t

Second centre less first centre.

sn 150 sn 500this week prior week this week prior week

Europe export-Singapore +95.00 +92.50 +135.00 +132.50

Baltic Sea-Singapore +157.50 +157.50 +205.00 +195.00

Europe export-UAE (LVI) -20.00 -20.00 -47.50 -47.50

Asia-US domestic +70.00 +74.00 +76.00 +78.00

Europe export-US domestic +67.50 +69.00 +121.00 +120.50

Black Sea-India (LVI) +55.00 +60.00 +85.00 +85.00

Asia-India (LVI) +2.50 +7.50 -75.00 -70.00

Baltic Sea-US domestic +130.00 +134.00 +191.00 +183.00

Baltic Sea-domestic NWE +155.00 +155.00 +157.50 +147.50

US export-Singapore +112.00 +111.50 +96.00 +92.50

Arbitrage opportunities - Group II $/t

Second centre less first centre.

n100/n150 n500/n600this week prior week this week prior week

Asia-ARA +90.00 +85.00 +30.00 +27.50

Asia-US domestic +18.00 +16.00 +143.00 +154.00

Asia-India +25.00 +25.00 +40.00 +40.00

US export-ARA +168.00 +165.00 -51.50 -66.50

US export-India +103.00 +105.00 -41.50 -54.00

US export-Singapore +153.00 +155.00 -19.00 -31.50

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Global base oil prices have eased relative to competing and feedstock fuels as outright prices fell, while diesel values firmed relative to crude.

European domestic SN 150 base oil price premiums to 30-day average Ice gasoil have eased to around $125/t. The premium was around $135/t for the same time last year. Base oils premium to vacuum gasoil (VGO) slipped below $315/t, versus more than $360/t this time last year.

US domestic N100 base oil premiums to 30-day average heating oil fell below $0.30/USG versus $0.65/USG this time last year. The premium over VGO fell below $0.60/USG against $0.98/USG the same time last year.

In Asia-Pacific, the premium of ex-tank Singapore SN 150 prices over Ice gasoil has fallen back below $130/t compared with less than $100/t the same time last year.

Base oil prices have been easing in most markets in recent weeks. But the pace of the fall is slower than the same time last year. Prices then slumped as producers sought to clear a surplus supplies.

A steady flow of exports from markets like the US and Russia in recent months have helped to curb building supplies in these markets. Many Asia-Pacific refiners are still replenishing stocks or fulfilling term contracts after maintenance earlier in the year. Others have yet to resume normal operations. European refiners have some supplies but prolonged run cuts have curbed the overhang in this market too.

Producers typical year-end clear-out of surplus supplies for accounting purposes is subsequently likely to be smaller than usual. It is also earlier than usual for some markets. A swathe of exports from the US has moved to India in recent months, adding to already large flows from the country this year.

Another shipment loading at the end of November is so large it can move to India on a medium-range size vessel. Such a large volume creates its own challenges. Indian buyers also typically seek prices at the low end of market levels. But with market prices already low and trading margins tight, the cargo will benefit from lower freight costs. It is also likely to clear out most remaining year-end supplies from the US.

The move is only possible because of the surplus volume available, highlighting the markets plentiful supplies. But it also highlights the transformation of the market in response to the rise in supplies, and the priority on finding an outlet for those supplies rather than holding

Feedstock FUndAmentALs

back to secure a higher price. US export prices and margins are being squeezed to

clear the supplies, at levels at or below diesel values. But the result is lower stocks.

The move and price levels contrasts with US prices in late 2011 and 2012 sufficiently high enough to attract arbitrage shipments from Asia-Pacific. These supplies added to a glut that helped to trigger the US price crash in second-half 2012. With arbitrage cargo shipments from the US moving to Asia-Pacific, this year is seeing a role reversal.

cdxXLusVgoPremiumWeek2: US domestic base oils premium to VGO 2% $/USG

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sn 150 ex-tank singapore premium to Ice gasoil $/tcdxXLap150PremiumWeek: SN 150 ex-tank Singapore premium to Ice gasoil $/t

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crude $/bl

Dubai crude front month 106.62 +0.99

SN 500 premium to Dubai crude 42.07 -1.34

oil products $/bl

Singapore 0.05% gasoil 124.10 +1.80

Gasoil premium to Dubai crude 16.70 +0.54

SN 500 premium to gasoil 24.59 -2.15

Asia sn 500 forward prices $/t

Low High

Nov 2013 1,045.00 1,065.00 -2.50

Dec 2013 1,039.95 1,059.95 -3.30

Jan 2014 1,036.50 1,056.50 -3.55

1Q 2014 1,033.35 1,053.35 -3.05

2Q 2014 1,022.60 1,042.60 -1.95The price shows the implied forward-curve base oil price required to maintain its existing profit margin relative to Ice gasoil futures. Refer to www.argusmedia.com for methodology

Asia sn 500 forward premium to gasoil $/t

midpoint

Nov 2013 124.75 -4.95

Dec 2013 129.80 -4.15

Jan 2014 133.30 -3.85

1Q 2014 136.45 -4.35

2Q 2014 147.20 -5.50The premium shows the implied forward-curve profitability of fob Asia SN 500 relative to Ice gasoil futures. Refer to www.argusmedia.com for methodology

Asia-Pacific base oil prices have nudged lower. Buyers have sufficient stocks to cover requirements and are now holding off in anticipation of lower prices.

While demand slows, buyers have received more offers of spot supplies from southeast and northeast Asia, as well as from markets outside the region, such as Europe and the US.

Chinese demand has steadied. But the countrys production has risen, curbing the market as an outlet for surplus cargoes. Rising supplies from Taiwan to China have added to the slowdown in demand from other sources.

But some trading firms have received more enquiries from Chinese buyers, while South Korean producers pointed to still firm buying interest from this market.

A sustained wave of cargoes from the US has been flowing to India, covering many blenders light-grade requirements in the country. The flows have dampened demand for supplies from markets like Malaysia.

supplies rise, outlets dwindleThe arbitrage to move Group II base oil supplies from Asia-Pacific to the US and Europe is shut, removing these markets as outlets.

The limited export opportunities come as production in northeast Asia revives after maintenance. Output is also starting to rise as new capacity comes on line in markets like South Korea and China.

With competition among producers rising, some of them have started to lower their price offers.

A Thai producer sold its remaining 2,000t of October-loading supplies at prices some $10/t lower than its earlier offer for October supplies. It sold SN 500 at around $1,060/t fob, with bright stock at around $1,160/t fob. It also started offering November supplies this week, although it still has

Group I $/t

Low High



Bright stock ex-tank Singapore 1,225.00 1,265.00 +0.00

SN 150 fob Asia 945.00 975.00 -2.50

SN 500 fob Asia 1,040.00 1,070.00 -2.50

Bright stock fob Asia 1,140.00 1,170.00 -2.50

Group II $/t

Low High



N150 fob Asia 985.00 1,025.00 -5.00

N500 fob Asia 1,090.00 1,135.00 -2.50

ex-tank singapore reference prices $/t

Group I Group II

sn 150 sn 600 Bright stock n150 n500

1,085.00 1,235.00 1,295.00 1,125.00 1,220.00

AsIA-pAcIFIc

Asia sn 500 premium to Ice gasoil $/tcdxXLapPremiumWeek: Asia SN 500 premium to Ice gasoil $/t

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AsIA-pAcIFIc

no spot supplies of SN 150. A trading firm received offers for about 5,000t of

November-loading base oils from Thai producers. Supplies of SN 500 were offered in a $1,065-1,075/t fob range, with bright stock in a $1,170-1,180/t fob range.

The offers follow a trend of an increasingly large volume of exports from Thailand in recent months, with shipments in September at their highest level in at least six years. The rise in exports reflects Thai base oils production holding at unusually high levels in recent months. Output in September remained high, despite earlier talk of plant run cuts.

Spot supplies were also offered from other producers in southeast Asia, as well as from markets like Japan, and even from Europe. But buying interest was muted, be it for cargoes or for supplies offered in flexibags.

The arbitrage to move Group I supplies from Europe to Singapore also looks increasingly hard to work, as the price spread between the two markets narrows.

Taiwan is to increase substantially its exports to China in November. The flows extend a recovery that began last month, after the restart of Formosa Petrochemicals Group II base oils unit in early October following a two-month shutdown for maintenance. But the producer is unlikely to have any spot supplies available before the end of this year.

A blender bought some more supplies of SN 500 from a supplier in the ex-tank Singapore market. It paid around $1,145/t ex-tank for the supplies. The price level was similar to the price it paid about two weeks ago for the same product.

The supplier continued to offer the product at around $1,150/t ex-tank.

Another supplier in the ex-tank Singapore market cut its offer for bright stock by $10/t to $1,290/t ex-tank.

It also offered Group II N150 of South Korean origin at $1,080/t ex-tank, with N500 at $1,180/t. It offered Group III 2cst at $1,195/t, with 4cst and 6cst at $1,225/t.

But there were few enquiries at these levels. Buyers were comfortable to maintain low inventories, or confident they could secure top-up supplies when required.

A Malaysian producer offered supplies of Group II+ N500 for November at $1,140/t fob Malacca. The price was $40/t lower than its October price level. The producer was targeting China for the supplies because of the low prices and plentiful US supplies in the Indian market.

The producer has yet to find a buyer for 2,000t of Group III 4cst and 6cst for prompt loading. It was offering Group III supplies at around $1,060/t fob, down from around $1,090-1,100/t in October.

Arbitrage opportunities - Group II base oils fob Asia $/tcdxXLfunArbAsia: Arbitrage opportunities - Group II base oils fob Asia $/t

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Fob Asia Group I vs Group II $/t

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China Others KITA

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china domestic prices

Yn/t $/t

Low High Low High

Group I, SN 150

northeast

Daqing 8,500.00 8,600.00 +0.00 1,394.00 1,410.00 -2.50

Dalian 8,600.00 8,800.00 +0.00 1,410.00 1,443.00 -3.00

north

Yanshan 8,700.00 8,800.00 +0.00 1,427.00 1,443.00 -2.50

south

Maoming 8,850.00 8,950.00 +0.00 1,451.00 1,468.00 -2.50

Group I, SN 400

northeast

Fushun 8,900.00 9,000.00 +0.00 1,459.00 1,476.00 -2.50

Dalian 9,000.00 9,100.00 +0.00 1,476.00 1,492.00 -2.50

south

Maoming 9,250.00 9,350.00 +0.00 1,517.00 1,533.00 -3.00

Group II, N150

east

Gaoqiao 9,130.00 9,230.00 +0.00 1,497.00 1,513.00 -3.00

south

Huizhou 9,160.00 9,380.00 +0.00 1,502.00 1,538.00 -3.00

china import price calculator *

Yn/t $/t

Low High Low High

Group I (imported prices)

SN 150 8,767.00 9,032.00 -5.00 1,438.00 1,481.00 -3.00

SN 500 9,637.00 9,940.00 -22.00 1,580.00 1,630.00 -6.50

Bright stock 10,394.00 10,621.00 -20.00 1,704.00 1,742.00 -6.50

Group II (imported prices)

N150 9,146.00 9,335.00 -4.00 1,500.00 1,531.00 -3.00

N500 10,015.00 10,318.00 -21.50 1,642.00 1,692.00 -6.50

* inc. 6% customs duty, 17% VAT and 1,126.00 Yuan/t consumption tax.

Northeast Asian base oil prices have nudged lower, as buyers hold back in anticipation that rising supplies will pressure prices further.

Lower crude prices and a cut in retail Chinese diesel prices added to weaker sentiment. A major producer in China this week cut its monthly internal supply price in response to sluggish market demand.

Some buyers are also waiting for the outcome in first-half November of a key meeting of top Chinese government officials that is expected to include measures to boost Chinas slowing economic growth.

Supplies are set to rise as a series of plants in northeast Asia start up new capacity or resume normal operations after prolonged maintenance. Some Chinese plants have been focusing on meeting demand from their downstream units or providing extra supplies to cover for shutdowns. Some of these plants are also likely to start offering spot supplies soon.

Prices offers of SN 150 from PetroChinas Dalian refinery held steady at Yn8,700/t ex-refinery. It offered SN400 at Yn8,900-8,950/t. Trading firms offered the product on an ex-tank basis in northeast China at around Yn9,000-9,100/t and Yn9,400/t respectively.

Price offers of SN 200 from PetroChinas Daqing refinery held steady at Yn8,200-8,300/t ex-works, while SN400 was at Yn8,700-8,800/t.

spot supplies to riseThe producers Fushun refinery will possibly start offering spot supplies of SN 200 and SN 400 in early November. It has had no such availability for many months, because of maintenance earlier in the year and more recently as it covered requirements for its downstream lubricant units.

Group I $/t

Low High

SN 150 cfr 985.00 1,020.00 -2.50

SN 500 cfr 1,100.00 1,140.00 -5.00

Bright stock cfr 1,200.00 1,230.00 -5.00

Group II $/t

Low High

N150 cfr 1,035.00 1,060.00 -2.50

N500 cfr 1,150.00 1,190.00 -5.00

Group III $/t

Low High

4cst cfr 1,095.00 1,130.00 -5.00

6cst cfr 1,100.00 1,135.00 -5.00

8cst cfr 1,080.00 1,105.00 -5.00

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Domestic price offers for supplies of Russian origin were mostly steady, although demand was weak. Supplies of SN 150 were offered at Yn8,550/t, or the equivalent of around $940/t on a daf Erlian basis. Supplies of SN 250 were offered at Yn8,650/t, SN 450 at Yn9,200/t and SN 650 at Yn9,550/t.

A large trading firm bought more than 3,000t of mostly light-grade base oils for November from Rosnefts Angarsk refinery in Russia. Chinese buying interest in and bid levels for the November supplies were lower than the previous month.

While demand for light grades has been steadier, buying interest in heavy grades remains weak.

Supplies of SN 500 of Thai origin were offered in a Yn9,650-9,800/t ex-tank range in east China. But the offer attracted scarce buying interest.

Bright stock originating from PetroChinas Karamay refinery remained plentiful, offered in a Yn10,000-10,500/t ex-tank range in east China.

A cargo of bright stock of Taiwan origin was offered at around $1,200/t fob. But buyers were more interested in supplies of Thai origin.

Steady demand and relatively tight spot availability of Group II base oils have helped to limit the downwards price pressure of these products for now. But the gradual rise in supplies is raising expectations that spot availability will soon improve markedly.

Hainan Handi in south China is expected to start offering supplies from November after a prolonged shutdown since July. Shipments from Formosa Petrochemicals plant in Taiwan are to rise markedly in November compared with last month. The start-up of Panjin Northern Asphalts new Group II unit in northeast China proceeded smoothly last week. It plans to market its supplies throughout China starting from early November.

CNOOC kept steady its posted prices for supplies from its Huizhou refinery, although availability this week of its N150 was tight.

An importer offered Group II N150 and N500 originating from Taiwan at Yn9,300/t and Yn10,400/t ex-tank in east China respectively. The offer was the equivalent about $1,100/t and $1,248/t cfr respectively.

Price offers of heavy-grade supplies of South Korean origin were in a wide Yn10,400-11,000/t range in east China. Offers in south China were at Yn10,000/t for N150 and Yn11,000/t for heavy grades.

A South Korean producer is still negotiating with Chinese buyers over spot supplies for November. Price discussions for N150 were around the $1,030/t level and around $1,140-

noRtHeAst AsIA

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1,150/t fob for heavy grades. The producer expected the sales volume to remain firm. But it is likely to be lower than in October when spot demand and sales were unexpectedly strong. It sold 2,000t of spot supplies to Taiwan for November. It sold 1,000t of N150 at around $1,030-$1,040/t fob and 1,000t of heavy-grade supplies at around $1,130-1,140/t fob.

Another South Korean producer is likely to start offering spot supplies from next week. It is likely to offer a similar volume to October, when it sold about 9,000t of supplies.

Supplies of Group III 4cst of Malaysian origin were offered by a trading firm at Yn10,000/t in northeast China. The supplies arrived several months ago.

A major producer said Group III sales were steady, even if slow. It had no plans to cut its prices.

Wholesale domestic diesel prices in China nudged down to Yn7,725/t in east China and Yn7,935/t in south China.

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Group I $/t

Low High

SN 150 cfr 1,005.00 1,025.00 -7.50

SN 500 cfr 1,035.00 1,050.00 -7.50

SN 150 (LVI) cfr 955.00 970.00 -7.50

SN 500 (LVI) cfr 965.00 995.00 -7.50

Bright stock cfr 1,195.00 1,220.00 -5.00

Group II $/t

Low High

N150 cfr 1,010.00 1,050.00 -5.00

N500 cfr 1,135.00 1,170.00 -2.50

Indian base oil prices have fallen, as producers everywhere from northeast Asia to Mideast Gulf to the US target the country with more surplus supplies.

Plant maintenance or unexpected disruptions had curbed supplies from at least one of these sources throughout most of this year. The disruptions had allowed the US especially to ship an unusually large volume of base oils to India throughout the year. The shipments include a large 27,000t cargo to load from the US Gulf coast in second-half November.

But production in these competing markets has now returned to normal. While shipments from the US remain high, they have been joined by rebounding supplies from markets like South Korea and Bahrain.

The wave of supplies and offers has prompted buyers to hold back. Term supplies at or above contracted volume levels have also helped to cover more of their needs.

Many buyers have also covered their requirements ahead of the upcoming Diwali festival and holiday on 2 November. They are likely to return to the market for more spot supplies after the public holiday.

The US cargo, loading on the vessel Atlantic Canyon in second-half November, is likely to be a combination of different light-grade supplies. The volume is evenly split between two US Gulf coast producers and was bought by two different trading firms. One of the trading firms has already sold about 14,000t of the supplies. Supplies of N70 and N100 from the cargo were likely sold in a $1,005-1,020/t range.

The shipment also includes a smaller volume of bright stock of US origin, which has been sold at around $1,190-1,200/t cfr India.

Domestic refinery prices

Rs/l * $/t

Group I

Ioc prices, chennai

SN 70 79.65 -0.40 1,590.00 -7.00

SN 150 75.75 -0.40 1,421.00 -7.00

SN 500 80.25 -1.80 1,481.00 -32.00

Bright stock 94.20 -1.30 1,703.00 -22.00

Ioc prices, mumbai

SN 70 77.65 -0.40 1,550.00 -7.00

SN 150 73.75 -0.40 1,384.00 -6.00

SN 500 78.25 -1.80 1,444.00 -32.00

Bright stock 93.05 -1.30 1,682.00 -22.00

Group II

Ioc prices, chennai

N70 83.11 -0.40 1,617.00 -7.00

N150 76.55 -0.40 1,469.00 -6.00

N500 81.01 -1.80 1,534.00 -33.00

Ioc prices, mumbai

N70 81.95 -0.40 1,595.00 -6.00

N150 74.55 -0.40 1,430.00 -7.00

N500 79.45 -1.80 1,505.00 -33.00

* prices in Rs/l effective from 01 Nov

Group III $/t

Low High

4cst cfr 1,060.00 1,080.00 -2.50

6cst cfr 1,050.00 1,080.00 -2.50

8cst cfr 1,045.00 1,070.00 +0.00

IndIA

Indian base oils vs europe $/t

* India midpoint price vs Europe high price

cdxXLindiapremium: Indian base oils vs Europe $/t

0

20

40

60

80

100


SN 150 Bright stock

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The shipment, which will likely reach India in early January, is likely to be among the last such cargoes from the US this year, after producers in the country work down their inventories earlier than usual before the end of the year.

Buyers target lower pricesThe shipments have curbed opportunities for suppliers like Malaysia. The countrys spot supplies are limited. But the price levels that Indian buyers are now targeting, reflecting similar prices paid for the US supplies, are too low for the Malaysian producer to accept.

But shipments from South Korea have continued to rebound, despite the inflows from the US.

A producer has almost completed its spot sales for November, with some 5,000-6,000t sold. It sold about 4,000t of N150 in a $1,030-1,060/t cfr range, with price levels at the lower end of the range reflected discounts for larger volumes. It sold about 2,000t of heavy-grade base oils at around $1,160-1,170/t.

Another producer expects to continue until the end of the year to supplement term supplies of Group II base oils with extra volumes. The supplies make up for a drop in term shipments earlier in the year because of maintenance. It still has no spot supplies of Group II base oils. But it is offering a small volume of Group III 8cst base oils. But buying interest has waned.

Shipments from Bahrain are also reviving after a pause in August and September. A 6,000t cargo of 4cst and 8cst base oils on the vessel Manas arrived in India during the past week. Another cargo with as much as 8,000t was to load from Bahrain at the end of October bound for India.

Group III base oil prices from different producers remained in a $1,060-1,080/t range, although buyers were seeking lower price levels. Bids were around $1,040-1,050/t cfr.

The supplies from South Korea in October include a small volume of heavy-grade Group II base oils from a refiner that began producing the grade in June. But there are unlikely to be any spot supplies from the producer at least until next year.

Other heavy-grade supplies, originating from Iran, were also offered into India, at much lower levels than the Group II supplies. There was likely an offer of SN 500 of Iranian origin at around $975/t cfr. The offer is some $25/t lower than an offer and sales of Iranian SN 500 in first-half October at $1,000/t cfr.

IndIA

cdxXLindiaImportOne: Indian base oil imports 000 t

hhh

130

140

150

160

170

180

190

200

Tota

l

Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 130

5

10

15

20

25

Iran

and

UA

E

Total Iran and UAE

Indian base oil imports 000 t Port data

Offers of Iranian base oils at that price level have closed the arbitrage for supplies from Russia, which has already seen a sharp fall in shipments to India during the past two months.

Pakistans NRL likely sold through a tender 2,000t of SN 65 and SN 100 for 5-7 November loading at a discount of around $80/t to fob Asia published prices. It had offered the supplies through a tender. The buyer was likely a UAE-based trading firm.

Indias domestic base oil producers cut their domestic prices for November by 0.40 rupees/l for light grades and Rs1.80/l ($0.03/l) for heavy grades. Prices were cut in response to weak domestic demand, falling prices for imported cargoes and a steadier currency relative to the US dollar.

Even with the price cut, the premium of Indian domestic prices, in US dollar terms, over imported cargo prices has widened to around $370/t, just $30/t lower than a 14-month high reached at the end of September.

With the domestic price premium holding at such a wide level, blenders and trading firms are likely to continue to buy more of the low-priced imported cargoes.

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Mideast Gulf base oil prices remain under pressure from a steady stream of supplies from Iran, while demand from lube blenders holds steady.

Irans two largest producers continue to offer more spot supplies at prices that have kept margins unusually tight, but that were more attractive than competing supplies from Russia.

A producer offered about 15,000t of base oils through a tender that closes on 2 November. It is offering through the tender SN 150, SN 500 and SN 650. Bids into the tender are expected to be close to or below the $900/t fob level.

The producer is this week loading the last 3,000 of SN 500 and 1,200t of SN 150 that it sold in its most recent tender in early October. It had offered around 14,000t in that tender, selling the supplies at around $895/t fob for the SN 150 and $925/t for the SN 500.

Another producer is offering supplies of SN 500 at around $890-895/t fob for cash payments. But uncertainty about the specifications of the product has deterred some buyers concerned that the colour may be darker than usual.

Some of the supplies are being offered into India, with an offer of a cargo this week at around $975/t cfr. Buying interest in this market was weak ahead of the Diwali festival and holiday on 2 November.

These price levels are curbing interest in Russian supplies, which are available from the Black Sea market at around $930/t fob and the cfr UAE equivalent of around $1,000-1,010/t. The UAE and Indian markets have provided attractive outlets to help soak up surplus Russian supplies in recent months.

Prices in the ex-tank market held steady at around $990/t ex-tank for SN 500, with around $5-10/t lower for SN 150. Bright stock was available in a $1,320-1,360/t ex-tank range.

Prices for supplies of on-specification SN 150, SN 500 and bright stock from a regional producer held steady at $1,080/t, $1,110/t and $1,275/t respectively on a cfr UAE or cfr India basis. But limited demand was curbing opportunities in the spot market.

Prices of Group II base oils have held steady. Supplies in Asia-Pacific are rising following the completion of prolonged shutdowns for maintenance. But producers have yet to start offering spot supplies into the Mideast Gulf market.

A blender received an offer for supplies of light grades of South Korean origin at $1,060/t cfr and above $1,200/t

Group I $/t

Low High

SN 150 cfr UAE 1,010.00 1,020.00 -2.50

SN 500 cfr UAE 1,030.00 1,050.00 -2.50

SN 150 (LVI) cfr UAE 935.00 950.00 -5.00

SN 500 (LVI) cfr UAE 955.00 970.00 -5.00

Iran export prices $/t

sepahan oil *

SN 500 fob 940.00 -10.00

Rubber process oil fob 600.00 +0.00

Slack wax fob 800.00 +0.00

* prices on a fob Bushehr basis, effective from 25 Oct to 31 Oct

Group III $/t

Low High

4cst ex-tank UAE 1,220.00 1,245.00 -2.50

6cst ex-tank UAE 1,220.00 1,245.00 -2.50

8cst ex-tank UAE 1,220.00 1,235.00 -2.50

mIdeAst GULF

cdxXLuaeLviPremium: SN 150/SN 500 vs (LVI) SN 150/SN 500 $/t

0

50

100

150

200


SN 150 SN 500

sn 150/sn 500 vs (LvI) sn 150/sn 500 $/t

cfr for heavy grades. But supplies of both grades were also available at around $1,150/t ex-tank.

Group III base oil prices were weaker. A cargo of Group III 4cst of South Korean origin for November delivery was sold by a trading firm at around $1,150-1,160/t cfr. Spot supplies within the region are set to rise in the coming weeks, as exports from Bahrain return to normal. Shipments had slumped in August and September following a plant disruption in July.

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Group I $/t

Low High



Bright stock fob domestic NWE 1,205.00 1,250.00 -2.50

SN 150 fob European export 950.00 975.00 -5.00

SN 500 fob European export 1,000.00 1,020.00 -5.00

Bright stock fob European export 1,140.00 1,165.00 -5.00

European base oil prices face sustained downwards pressure, as blenders hold off in anticipation of a further drop in prices, while producers maintain offer levels to protect already-low margins.

But the relative lack of export opportunities at current price levels, and the relatively high domestic European prices compared with Baltic Sea prices, raises the prospect of an additional build in supplies over the coming weeks.

The limited number of outlets has led to growing competition to move supplies from Europe, the former Soviet Union, and the US to markets like west Africa and India where buyers typically target much lower prices.

Blenders are also holding off buying additional supplies, or are negotiating hard for any such supplies, as they start to manage their stock levels carefully for year-end accounting purposes. They also have a widening choice of supply options, from lower priced supplies from the Baltic market to signs of growing supplies of premium-grade base oils.

The fall in Baltic Sea prices since mid-August has widened their discount to domestic European prices to more than $150/t, its widest level since the end of last year.

Supplies of premium-grade base oils from markets like the US and Mideast Gulf have also revived. Belgian imports from the US rose in July to their highest level in a year. US exports to Belgium in August rose to their highest since the beginning of 2012.

But some more traditional buyers of Group l base oils remain hesitant about switching to Group ll base oils until more suppliers are available in Europe, and until the price premium of Group II base oils over Group I narrows or disappears.

The increasing flows from the US have coincided with a fall in US export prices for light-grade base oils. Their

Group III /t $/t

Low High Low High

4cst fca NWE 940.00 985.00 +0.00 1,294.00 1,356.00 -1.00

6cst fca NWE 945.00 990.00 +0.00 1,301.00 1,363.00 -1.00

8cst fca NWE 935.00 980.00 +0.00 1,287.00 1,349.00 -1.00

Turkey Group I $/t

Low High

SN 150 cfr Gebze 925.00 955.00 -5.00

SN 500 cfr Gebze 925.00 955.00 -5.00

eURope

oil products

Heating oil 0.1% barge ($/t) 933.00 +21.50

Vacuum gasoil 0.5% barge ($/t) 742.50 -8.38

Vacuum gasoil 1.6% barge ($/t) 726.88 -3.25

Fuel oil 3.5% barge ($/t) 579.50 +1.00

Straight run M-100 fuel oil cargo ($/t) 598.00 +1.00

oil products premiums

Heating oil premium to crude ($/bl) 17.55 +2.06

Heating oil premium to VGO 1.6% ($/bl) 18.45 +3.37

SN 500 premium to heating oil ($/bl) 17.01 -3.59

SN 500 premium to VGO 1.6% ($/bl) 35.45 -0.23

crude $/bl

North Sea Dated 107.79 +0.83

SN 500 premium to North Sea Dated 34.56 -1.53

cdxXLeuPremiumWeek: European SN 500 premium to Ice gasoil $/t

-50

0

50

100

150

200



LineSet1european sn 500 premium to Ice gasoil $/t

Group II /t $/t

Low High Low High

N150 fca ARA 781.00 810.00 +1.00 1,075.00 1,115.00 +0.00

N600 fca ARA 817.00 843.00 +1.00 1,125.00 1,160.00 +0.00

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discount to domestic European SN 150 prices has widened to more than $125/t, from around $90/t in August and less than $50/t in May.

producers seek to protect marginsBut European base oil producers, including a major producer, will likely aim to maintain their price offer levels in November to support already-weak margins. Plant run cuts and continuing maintenance has also curbed some of the supply overhang. Exports of surplus supplies to markets like west Africa have also cleared some of the surplus.

The pressure on base oil margins has been exacerbated by the relative strength of European diesel prices in recent weeks. Diesel crack spreads against crude have risen to their highest level in seven months.

With margins under sustained pressure, some sellers are evaluating their production plans for 2014. With supplies of premium-grade base oils to surge next year, the pressure on base oil margins and production will continue.

Activity in the export market is muted, with arbitrage opportunities limited at current price levels. A trading firm has likely won the tender to supply more than 18,000t of base oils to Venezuelas state-owned PdV. The company was looking to buy the supplies in two cargoes, comprising SN 85, SN 150, SN 500 and bright stock. It requested one cargo for delivery in early November and the second optional cargo for delivery at the end of the month. One of the two shipments will be supplied from the US, and the other from Europe, because of the tight delivery time for the first cargo.

A west Mediterranean producer was offering a 3,000t cargo of SN 150 into Turkey within the published prices range. But it was unable to attract any buying interest at such levels, reflecting the still-high cost of European cargoes relative to competing supplies from markets like Russia.

A north African producer possibly offered through a tender about 5,000t of light- and heavy-grade base oils, although buying interest for the supplies was muted.

Unapproved Group lll base oils continued to apply downwards pressure on price offers for approved grades. Their lower prices, at levels substantially lower than published price levels, also reflected competition for market share in this segment of the market.

Producers have pointed to weak margins to support current price levels. But margins are now at their highest level in six months. The discount of European Group III prices to US prices is also at its narrowest level in more than a year.

eURope

european forward prices $/t

sn 150 sn 500

Low High +/- Low High

Nov 2013 952.50 972.50 -5.00 1,000.00 1,020.00 -5.00

Dec 2013 947.45 967.45 -5.80 994.95 1,014.95 -5.80

Jan 2014 944.00 964.00 -6.05 991.50 1,011.50 -6.05

1Q 2014 940.85 960.85 -5.55 988.35 1,008.35 -5.55

2Q 2014 930.10 950.10 -4.45 977.60 997.60 -4.45The price shows the implied forward-curve base oil price required to maintain its existing profit margin relative to Ice gasoil futures. Refer to www.argusmedia.com for methodology

european forward premium to gasoil $/t

sn 150 sn 500

midpoint midpoint

Nov 2013 32.25 -7.45 79.75 -7.45

Dec 2013 37.30 -6.65 84.80 -6.65

Jan 2014 40.80 -6.35 88.30 -6.35

1Q 2014 43.95 -6.85 91.45 -6.85

2Q 2014 54.70 -8.00 102.20 -8.00The premium shows the implied forward-curve profitability of fob Europe SN 150 and SN 500 relative to Ice gasoil futures. Refer to www.argusmedia.com for methodology

cdxXLfunEuBB: European export vs Baltic/Black Sea $/t

hhh

-50

0

50

100

150


Vs SN 150 fob Baltic Sea Vs SN 500 fob Baltic SeaVs SN 150 fob Black Sea Vs SN 500 fob Black Sea

european export vs Baltic/Black sea $/t

cdxXLfunEug3: European 4cst vs SN 150, vs US 4cst $/t

hhh

-300

-200

-100

0

100

200

300

400


Vs SN 150 fob domestic NWE Vs 4cst US domestic

european 4cst vs sn 150, vs Us 4cst $/t

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eURope

Turkish base oils prices have edged lower. But buying activity increased, amid signs of tighter Black Sea supplies and stocking up ahead of the introduction of a new licensing system for imports.

Turkish base oils demand has picked up ahead of the start of the licencing system, which aims to curb the illegal usage of base oils in the country. Lower volumes of base oils offered from Russia and Uzbekistan provided further price support, helping to leave balanced the supply situation in the light grades market.

The new system is expected to take effect from 1 January 2014. Some lubricant blenders have applied for the new licences, which will take between three and eight weeks to be processed. The long application process has prompted some buyers to consider taking advantage of any attractive price offers to restock before the end of the year and to avoid the risk of being unable to buy any product after 1 January.

A Russian producer has little spot availability of SN 150, after loading two cargoes with a combined volume of 8,000t of mostly SN 150 to take to Turkey at the end of October. Prices for the material were pegged at $945-955/t cfr levels.

A blender will likely buy around 10,000t of base oils at the end of November from the Black Sea and Baltic Sea markets. The blender said European product is still too expensive for Turkish buyers. Other buyers are holding out for further price falls before committing to new purchases.

A Russian trading firm possibly sold 3,000t of light-grade base oils loading in second-half November at around $945/t fob. The freight rate was estimated at around $35/t. Freight rates to Gebze have been creeping higher because of increasing vessel activity amid higher vegetable oil exports from Russia and Ukraine. These are shipped in the same

type of vessel as base oils.A trading firm was negotiating over the sale of a small

cargo of SN 900 at levels close to $1,100/t cfr Turkey. It expects a pick-up in shipping activity will boost demand for marine lubricants, resulting in a subsequent rise in demand for heavy-grade base oils such as SN 900.

A Turkish blender has issued a tender to buy 50,500t of base oils, with a variance of 20pc above or below this level, for the full calendar year of 2014. It requested 18,000t of SN 150, 21,000t of SN 500, 8,500t of bright stock and 3,000t of SN 100. It requested bids on a dap/cif Derince basis. The tender closes on 11 November.

Another blender is negotiating its 2014 term supplies for 60,000t of base oils.

A western Mediterranean producer is offering a 3,000t cargo of SN 150 within the published price range. No deal has been concluded as price and specification differences stymied any trade.

Some lingering supplies from the Fergana refinery remain in the market. About 3,000t of light-grades from Fergana are expected to be loaded in second-half November out of Georgia.

Turkeys only domestic producer kept its prices unchanged. It is offering SN 150 at 2,145 Turkish lira/t ($1,077/t) from the Izmir refinery, without service charges. It offered SN 500 at TL2,220/t and bright stock at TL2,500/t.

tURkey

India 0

Us 2

Russia 12,864

Greece 6,130

netherlands 961Germany 0

France 1,205

Italy 13,949

Iran 64

serbia 0Uzbekistan 5,135

Belgium 2,935

Hungary 0

turkmeninstan 0

AUG 2013

TurkStat

poland 4,094

spain 0

morocco 0

Brazil 0

Ukraine 0

tURkeys key BAse oIL sUppLIeRs t

Freight rates to Gebze, Turkey $/t

Route 3,000t 5,000t Route 3,000t 5,000t

Black Sea 27-29 24-25 Antwerp 65-68 55-58Augusta 40-43 31-34 Baltic 80-85 70-75UAE 85-90 77-80 Mumbai 97-100 92-95

* provided at market close on 31 October by Borachart (www.borachart.com)

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Russian base oil prices slid for a sixth straight week, pressured by stable supplies and weak buying activity.

Prices in the Baltic Sea market were under pressure because of low buying interest, weak demand from west Africa and plenty of availability from Russian and Belarusian producers.

But cargo discussions on a fob Baltic basis were limited. Buyers were expecting lower prices, but the cost of sellers product in their tanks prevented them from offering the supplies at lower prices without incurring losses. But a trading firm was ready to discuss levels below $950/t fob Baltic for supplies if there were firm interest from a buyer. It had started offering the same cargo in September at around $1,050/t.

A trading firm is possibly negotiating the sale of a cargo of around 8,000t into the Latin American market. With flows to markets like Nigeria slowing, such a shipment will help to ease the pressure on Baltic prices. But the specifications of the base oils required, with a viscosity index higher than 95, may be hard to meet with Russian SN 500 usually below this level.

A Russian major producer has been almost completely absent from the spot market since the first week of October. Only about 1,000t of spot supplies was loaded for a buyer in Europe last week. But the producer has no plans to cut its prices. It expects European demand to pick up ahead of Europes implementation of a 3.7pc import duty on Russian cargoes from 1 January.

Base oil loadings from Baltic ports fell to 25,500t in October, down by 20,000t compared with the previous month (see table on p15). While cargo loadings fell, refinery run rates in Russia rose, with Nizhny Novgorods base oils unit resuming operations from early October following maintenance work.

Prices in the market for heavy-grade base oils got some support from expectations of lower supplies. The Volgograd refinery will not produce SN 900 in November because of maintenance at one of its units.

naftan struggles to sell sn 500Belarus Naftan refinery again offered 4,000t of SN 500 for November loading. Its offer fell from 655/t at the end of last week to 615/t ($836/t) fca Novopolotsk by 31 October. The cost of bringing the product to a Baltic port to offer on a fob Baltic basis is around $45/t, excluding any trading margin.

But there was no buying interest. Several buyers were concerned about the quality of the product following the

Baltic sea Group I $/t

Low High

SN 150 fob 890.00 910.00 -2.50

SN 500 fob 930.00 950.00 -12.50

Black sea Group I $/t

Low High

SN 150 fob 900.00 915.00 -2.50

SN 500 fob 875.00 915.00 -7.50

Russian base oils, lubes rail/river exports 000t

sep Aug sep Aug

Rail

overland 40.60 44.10 -3.50 Baltic 30.52 28.38 +2.14

Afganistan 0.00 0.00 +0.00 Kaliningrad 13.91 9.00 +4.91

Armenia 0.06 0.00 +0.06 Liepaja 7.04 4.82 +2.22

Azerbaijan 0.98 0.44 +0.54 Riga 9.26 8.47 +0.79

Belarus 1.59 1.02 +0.57 Ventspils 0.00 0.00 +0.00

China 14.90 9.96 +4.94 St.Petersburg 0.31 6.09 -5.78

Hungary 0.11 0.11 +0.00

North Korea 0.00 0.00 +0.00 Black sea 14.44 8.45 +5.99

Finland 1.48 1.85 -0.37 Eisk 0.00 0.00 +0.00

Kazakhstan 4.92 7.57 -2.65 Feodosiya 0.00 0.00 +0.00

Kyrgyzstan 0.89 0.66 +0.23 Kavkaz 3.60 0.29 +3.31

Latvia 0.95 1.35 -0.40 Nikolaev 0.00 0.00 +0.00

Lithuania 1.98 3.96 -1.98 Novorossiisk 9.30 6.03 +3.27

Moldova 0.24 0.31 -0.07 Odessa 1.54 2.13 -0.59

Mongolia 0.52 0.61 -0.09 Kerch 0.00 0.00 +0.00

Romania 1.20 1.42 -0.22

Poland 0.96 0.64 +0.32 River

Slovakia 0.00 0.00 +0.00 Volgograd 18.30 17.16 +1.14

Tajikistan 0.87 0.69 +0.18

Turkmenistan 0.02 0.25 -0.23 Far east

Ukraine 8.54 12.38 -3.84 Nakhodka 0.10 0.10 +0.00

Uzbekistan 0.39 0.88 -0.49

total Russia rail, river exports 104.34 107.11 -2.77

naushki Group I $/t

Low High

SN 150 cpt 830.00 860.00 +15.00

SN 500 cpt 910.00 960.00 +0.00

RUssIA And FsU

Russian base oil, lubes rail/river exports by supplier 000t

sep Aug sep Aug

Volgograd 36.68 32.35 +4.33 Omsk 8.76 9.00 -0.24 by rail 18.38 15.19 +3.19 Yaroslavl 5.57 4.82 +0.75 by river 18.30 17.16 +1.14 Ufa 7.30 8.47 -1.17N.Novgorod 2.50 5.96 -3.46 Orsk 0.00 0.00 +0.00Perm 17.95 25.04 -7.09 Other 5.31 6.09 -0.78Novokuibyshevsk 7.11 7.47 -0.36 Angarsk 13.16 7.91 +5.25 total 104.34 107.11 -2.77

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RUssIA And FsU

plants recent shutdown for maintenance. Others cited a lack of demand for fob Baltic supplies. Others were put off by the long loading period, during the month of November, at a time when the base oil market is backwardated.

Demand from Baltic blenders was weak. A buyer was planning to look for lower priced cargoes in about two weeks. Ukrainian blenders were able to secure supplies of Russian origin at lower price levels compared with the offers from Naftan.

The Ukrainian market remained relatively stable compared with the Baltic market, even with plenty of supplies offered into the country. Small volumes of SN 150 and SN 350 from Rosneft refineries were bought this week at around $860-870/t cpt on a Russian-Ukraine border basis. Bright stock was offered from Yaroslavl refinery at $985/t cpt.

Supplies from Ufa refinery were offered into the market at $870/t on a cpt Russia-Ukraine border basis. Lower quality SN 150 from Baku refinery was offered on a formula-price basis linked to fuel oil. The offer was the equivalent of around $850/t cpt on the Ukraine border.

A distributor of Lukoils product recently cut its prices in Ukraine by 100 hryvnia/t ($12.20/t).

Rosneft failed to sell all of its November supplies offered from its Novokuibyshevsk refinery in its recent tender, so it reoffered the remaining supplies later this week. It had more heavy grades to offer than light grades.

Demand for its supplies from its Yaroslavl refinery was stronger because of the products better quality and lower transportation costs to the Baltic market. A small volume of SN 400 and bright stock from the Yaroslavl refinery was bought at $880/t on a cpt Russia-Latvia border basis and $920/t cpt respectively.

Gazpromneft was offering around 8,000t of base oils from its Omsk and Yaroslavl refineries for November loading. The producer had tight availability of SN 150, with SN 500, SN 650 and bright stock accounting for about 90pc of the volume offered.

Trading firms were discussing levels around $880-885/t cpt on the Russia-Latvia border for SN 500 and $850-855/t for SN 150.

Turkish activity delightsSellers reported a pick-up in buying activity from the Turkish market. A trading firm received three requests for cargoes this week, compared with almost no such interest for second-half October. Turkish demand could be getting a boost as buyers start to build stocks before the launch

of a new licensing system in January.A 3,000t cargo of light grades was possibly sold at

around $945/t cfr Turkey. The equivalent fob Black Sea price, reflecting high freight costs for the port of loading, is around $910/t fob. The cargo, originating from the Novokuibyshevsk refinery, is expected to load in second-half November.

A producer loaded two cargoes with a combined volume of 8,000t of mostly light grades from the Black Sea bound for Turkey at the end of October. It consequently has limited availability of SN 150. But demand for its SN 500 was weak. Buyers in the UAE and India were instead well supplied with product from Iranian refiners whose

cdxXLbalticPremiumWeek: Baltic SN 150 vs VGO, vs domestic NWE $/t

0

50

100

150

200

250

300


Premium to VGO 1.6% cif NWE Discount to fob domestic NWE

Baltic sn 150 vs vGo, vs domestic nwe $/t

Baltic loadings t

port/terminal vessel next port volume B/L date

Svetly /Lukoil Harbour Muran Ghent 3,100 01-02 Nov

Svetly /Lukoil Key Bora Dordrecht/Antwerp 3,200 26 Oct

Riga/OVI Lexus Humburg 2,700 26 Oct

Riga/OVI Aksaz C Hull 3,500 24 Oct

Svetly /Lukoil Key Bora Gothenburg 2,100 10 Oct

Svetly /Lukoil Loya Rotterdam/Singapore 3,000 13 Oct

Liepaja/DG Nordic Helsinki Rotterdam 8,000 13 Oct

Svetly /Lukoil Ursula Essberger Rotterdam/Singapore 4,000 04 Oct

Riga/OVI MRC Semiramis Lagos 4,800 29 Sep

Svetly /Lukoil Loya Dordrecht 3,000 27 Sep

Russian and Belarusian base oil export duty * $/t

nov 2013 oct 2013 sep 2013 Aug 2013 Jul 2013 Jun 2013

261.20 274.80 264.40 250.60 243.60 237.10

May 2013 Apr 2013 mar 2013 Feb 2013 Jan 2013 dec 2012

249.70 265.00 277.60 266.20 261.10 261.70

* tax paid by producer for base oils export outside of Russia, Belarus, Kazakhstan, Tajikistan and Kyrgyzstan

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perm $/t

To Baltic Sea 526

To Black Sea 449

To Naushki 452

omsk $/t

To Baltic Sea 473

To Black Sea 425

To Naushki 505

Ufa $/t

To Baltic Sea 517

To Black Sea 479

To Naushki 452

volgograd $/t

To Baltic Sea 534

To Black Sea 541

To Naushki 384

FsU key pRodUceRs sn 500 pRIce (netBAck) * $/t

* price calculated by subtracting transport costs and taxes between the producer and the fob Baltic, fob Black Sea and cpt Naushki pricing point.

RUssIA And FsU

price ideas were below published price levels.Supplies from Uzbekistans Fergana refinery have

halted for now, according to its regular customers. The plant has production capacity of up to 200,000 t/yr of base oils. The refiners management is under investigation and there is staff rotation at the refinery. So export flows are unlikely to resume this year.

A trading firm was offering SN 900 out of Odessa port at levels close to $1,100/t cif Gebze.

Slowing Chinese demand and weaker prices curbed Gazpromneft and Lukoils interest in moving more November-loading Russian supplies to this market. A better netback for moving supplies to the Baltic market, and rising freight costs to China to cover the use of railcars with heating, also deterred producers.

But the lower availability of supplies for China, as well as higher freight costs, helped to support prices. Demand for SN 150 improved slightly because of lower availability of these grades from Russia that resulted in higher prices.

Rosneft closed its November export tender for supplies from its Angarsk refinery. It plans to load around 10,000t of base oils to take to China via Naushki in November. The producer possibly sold its light grades at around $850-870/t cpt and heavy grades at close to $970/t cpt Naushki levels.

Another producer received much lower bids for its

cargoes, at $850/t cpt Naushki for SN 150 and only $20-50/t higher for SN 500 and SN 650. The bids were for relatively small volumes. The refiner does not plan to sell any supplies to China this month.

A third refiner failed to receive any bids in response to its offers, reflecting the slowdown in demand.

The Argus Russian diesel index was steady at 31,475 roubles/t ($981.70/t). Prices were supported by higher demand for winter-grade diesel and limited spot availability from several refineries.

cdxXLruExportLine: Russian rail exports via Baltic/Black Sea 000 t

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50

75

100

Sep 12 Dec 12 Mar 13 Jun 13 Sep 13

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Russian rail exports via Baltic/Black sea 000 t

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Group I bulk export prices $/USG $/t

Low High Low High

SN 150 fob 3.04 3.20 -0.01 921.00 970.00 -3.00

SN 500 fob 3.45 3.59 -0.02 1,028.00 1,070.00 -6.00

Bright stock fob 3.75 3.83 -0.04 1,103.00 1,126.00 -12.00

Group II bulk export prices $/USG $/t

Low High Low High

N100 fob 2.91 3.07 -0.01 902.00 952.00 -3.00

N200 fob 3.08 3.24 -0.01 939.00 988.00 -3.00

N220 fob 3.08 3.24 -0.01 939.00 988.00 -3.00

N600 fob 3.90 4.06 -0.05 1,170.00 1,218.00 -15.00

US base oils prices have extended their steady downtrend, as seasonally low domestic demand prompts sellers to offer supplies at increasingly wide discounts. Prices for heavy grades continue to fall faster than lighter grades, erasing more of the price premium they have established over light grades this year.

Blenders inventory management ahead of the end of the year, and expectations of a further fall in prices, has added to a reluctance to buy.

The sustained flow of large export volumes has added to signs that supplies remain plentiful, even ahead of the expected rise in availability from early next year as new production capacity comes on line.

The slide in domestic and export prices have spurred expectations of an adjustment to posted price levels. The discount of Argus spot prices to posted prices for light-grade Group I base oils is at its widest level since February. The discount of spot prices to Group II posted prices has increased to its widest level this year.

discounts widen to spur demandLarge-volume buyers were being offered discounts of $0.10-0.15/USG for spot supplies in the domestic market. Discounts of as much as $0.50/USG or more, at prices close to, or lower than, diesel prices, were being offered for some export supplies.

Such price levels have attracted buying interest from markets like India. They have also kept shut the arbitrage to move supplies from Asia-Pacific to the US, curbing the prospect of building supplies from imports.

The US exports include an unusually large 27,000t cargo of light-grade Group II base oils set to head for India in second-half November on the vessel Atlantic Canyon. The supplies are from two US Gulf coast producers. The

domestic prices $/USG $/t Low High Low High

Group I

SN 150 3.32 3.48 -0.02 1,006.00 1,054.00 -6.50

SN 500 3.71 3.88 -0.02 1,106.00 1,156.00 -4.50

Bright stock 4.16 4.32 -0.04 1,223.00 1,270.00 -12.00

Group II

N100 3.22 3.38 -0.01 998.00 1,048.00 -3.00

N200 3.40 3.55 -0.01 1,037.00 1,083.00 -1.50

N220 3.40 3.55 -0.01 1,037.00 1,083.00 -1.50

N600 4.10 4.27 -0.05 1,230.00 1,281.00 -13.50

Group III

4cst 4.39 4.55 -0.01 1,383.00 1,433.00 -3.00

6cst 4.48 4.64 -0.02 1,411.00 1,462.00 -6.50

8cst 4.48 4.64 -0.02 1,411.00 1,462.00 -6.50

naphthenic domestic prices $/USG $/t

Low High Low High

Pale oil 60 3.89 4.06 -0.02 1,153.00 1,203.00 -4.50

Pale oil 100 3.73 3.88 -0.02 1,093.00 1,137.00 -4.50

Pale oil 500 3.71 3.85 -0.02 1,066.00 1,106.00 -6.00

Pale oil 2000 3.77 3.91 -0.02 1,076.00 1,116.00 -5.00

naphthenic bulk export prices $/USG $/t

Low High Low High

Pale oil 60 fob 3.67 3.82 -0.01 1,087.00 1,132.00 -4.50

Pale oil 100 fob 3.51 3.67 -0.01 1,029.00 1,076.00 -3.00

Pale oil 500 fob 3.49 3.64 -0.01 1,003.00 1,046.00 -4.50

Pale oil 2000 fob 3.54 3.70 -0.01 1,010.00 1,056.00 -2.50

Us

cdxXLusHeatingPremiumWeek: US SN 150 domestic premium to heating oil $/USG

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SN 150Us sn 150 domestic premium to heating oil $/USG

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shipment extends a trend of steady and high US export flows to India throughout the year.

The freight rate for the shipment was around $82/t, with sales into India at around $1,005-1,020/t cfr. The netted back fob US Gulf coast price, excluding any trading margin and other costs, is around $2.98-3.02/USG.

The move to clear such large volumes of supplies comes ahead of the expected rise in market availability following the planned start-up of Chevrons new Group II plant at its Pascagoula refinery early next year.

The large export cargo also included a small volume of bright stock, sold to India at around $1,200/t cfr. The equivalent netted back US Gulf coast price is around $3.80/USG.

The surge in exports to India, and signs of rising shipments to Europe, helped to counter the impact of slow buying interest from Mexico. That countrys base oils production has surged this year, while finished lube demand has ebbed (see p23).

A trading firm likely won a tender to supply Venezuela with a 10,130t cargo of Group I base oils in early November, along with a second optional 8,300t cargo in second-half November. The first cargo, for 4-7 November delivery, will likely be supplied from the US, with the second cargo from Europe.

Colombia has possibly issued a tender to buy 2,500t of four different grades of Group I and Group II base oils. The request was expected to be covered by supplies from the US.

The clear-out of surplus US supplies at the end of this year will be followed by maintenance at several plants in the first quarter of next year, including at Motivas Port Arthur, Texas refinery starting in January.

A deferred 20-day turnaround at PBF Energys

Us

Us sn 500 forward premium to heating oil

$/USG $/t

midpoint midpoint

Dec 2013 0.53 -0.01 157.55 -4.75

Jan 2014 0.53 -0.02 157.65 -5.25

Feb 2014 0.53 na 158.35 na

1Q 2014 0.53 -0.02 157.95 -5.95

2Q 2014 0.56 -0.03 166.90 -8.90The premium shows the implied forward-curve profitability of fob US export SN 500 relative to Nymex heating oil futures. Refer to www.argusmedia.com for methodology

Us sn 500 forward prices $/USG $/t Low High Low High

Dec 2013 3.50 3.55 -0.01 1,041.50 1,056.40 -4.80

Jan 2014 3.49 3.54 -0.02 1,041.40 1,056.30 -4.35

Feb 2014 3.49 3.54 na 1,040.75 1,055.65 na

1Q 2014 3.49 3.54 -0.01 1,040.40 1,055.30 -3.85

2Q 2014 3.46 3.51 -0.01 1,031.60 1,046.50 -2.55The price shows the implied forward-curve base oil price required to maintain its existing profit margin relative to Nymex heating oil futures. Refer to www.argusmedia.com for methodology

crude $/USG $/bl

Nymex WTI crude front month 2.29 -0.02 96.38 -0.73

SN 500 premium to WTI 1.23 +0.00 51.47 -0.11

Argus Sour Crude Index (ASCI) 2.22 +0.01 93.20 +0.24

SN 500 premium to ASCI 1.30 -0.03 54.65 -1.08

oil products $/USG $/bl

NYH heating oil barge 2.94 +0.09 123.48 +3.71

Low sulphur VGO 0.5% cargo 2.64 -0.07 110.88 -2.73

High sulphur VGO 2% cargo 2.58 -0.07 108.38 -2.73

oil products premiums

Heating oil premium to WTI 0.65 +0.11 27.10 +4.44

Heating oil premium to VGO 2% 0.36 +0.16 15.10 +6.44

SN 500 premium to heating oil 0.58 -0.11 24.36 -4.57

SN 500 premium to VGO 2% 0.94 +0.05 39.47 +1.89

Us n100 vs sn 150, Us 4cst vs n100 $/USGcdxXLusg123Premium: US N100 vs SN 150, US 4cst vs N100 $/USG

-0.50

0.00

0.50

1.00

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N100 vs SN 150 4cst vs N100

Us sn 500 premium to vGo 2% $/USGcdxXLusVgoPremiumWeek: US SN 500 premium to VGO 2% $/USG

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LineSet1

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Us

Paulsboro refinery will begin at the end of January. PBF also plans to add additional infrastructure to its Delaware refinery to be able to move more Bakken crude to the Paulsboro plant. While refinery margins are likely to benefit from the competitive price of the crude, Bakken is not considered a lube-friendly crude.

Base oil prices benefited from weakening vacuum gasoil (VGO) prices relative to crude and diesel. VGO demand is expected to ease in November, with much of the autumn plant turnaround activity coming to an end.

The SN 150 premium over the four-week average US Gulf coast VGO price nudged up to $0.72/USG, its highest level since May. The SN 150 premium over four-week average ultra-low sulphur diesel prices nudged down to $0.45/USG.

US naphthenic base oil prices have slipped, pressured by lower crude values. But supplies remain more balanced than for paraffinic grades, while seasonal demand in the southern hemisphere is helping to counter slower buying interest in the northern hemisphere ahead of its winter.

But the recent price strength has left values at significant premiums to Group II light-grade base oils, as well as to light-grade prices in markets like India.

US pale oil 60 is holding close to its largest premium to US light-grade base oils in more than three years. Pale oil 60 export prices are also at their highest premium to Indian light-grade prices in more than three years.

Even with the lower prices, margins are holding firm. The premium of domestic pale oil 60 over the four-week average of Light Louisiana Sweet crude firmed to $65/bl, its highest level in more than a year.

nApHtHenIc BAse oILs

cdxXLusExportLineBrazil: US base oil exports to Brazil 000 bl

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Jul 03 Jul 05 Jul 07 Jul 09 Jul 11 Jul 13

Brazil EIAUs base oil exports to Brazil 000 bl

Us pale oil 60 premium to crude $/blcdxXLusnapPremiumWeek: US Pale oil 60 premium to crude $/bl

hhh

30

40

50

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80

Nov 12 Feb 13 May 13 Jul 13 Oct 13

Crude front month = 0

Premium to WTI Premium to LLS Premium to Brent

Argus European Base Oils Markets 201419-20 March 2014, Istanbul

Save 200 with the super early discount. Register online before 15 November.

argusmedia.com/euro-baseoils EventsConsulting

Market Reporting

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Group II *

calumet shreveport effective from $/USG

80 15 Aug 13 3.59 +0.10

100 15 Aug 13 3.56 +0.10

150 15 Aug 13 3.99 +0.10

325 15 Aug 13 4.65 +0.15

Group II+ *

sk Lubricants Gulf coast phillips 66 Gulf coasteffective

from $/USG effective

from $/USG

50/60 16 Aug 13 4.55 +0.10

70/80 19 Aug 13 5.16 +0.10 16 Aug 13 4.65 +0.10

Group II+ *

exxonmobil Gulf coast effective from $/USG

110/130 16 Aug 13 3.87 +0.15

190 16 Aug 13 3.82 +0.15

Group III *



from $/USG

4cst 19 Aug 13 5.46 +0.10 16 Aug 13 4.93 +0.10

6cst 19 Aug 13 5.46 +0.10

8cst 19 Aug 13 5.44 +0.10 16 Aug 13 5.03 +0.10

Us posted pRIces $/USG

*the column shows the price difference between the current and previous posted price

Group I *

exxonmobil Gulf coast HollyFrontier Paulsboro Refining east coast calumet shreveporteffective




from $/USG

70/75 23 Aug 13 3.61 +0.07

100 16 Aug 13 3.67 +0.15 23 Aug 13 3.61 +0.07 21 Aug 13 3.92 +0.15

150 16 Aug 13 3.71 +0.15 23 Aug 13 3.79 +0.07 21 Aug 13 3.86 +0.15

250 23 Aug 13 3.93 +0.07

300/350 16 Aug 13 3.86 +0.15

500 23 Aug 13 4.41 +0.15 21 Aug 13 4.37 +0.15

600/650 16 Aug 13 4.23 +0.15

700 16 Aug 13 4.23 +0.15 21 Aug 13 4.40 +0.15 21 Aug 13 5.05 +0.15

Bright stock 16 Aug 13 4.56 +0.15 23 Aug 13 4.75 +0.15 21 Aug 13 4.71 +0.15 21 Aug 13 4.77 +0.15

Group II *

phillips 66 Gulf coast chevron west coast motiva Gulf coast FHR Gulf coasteffective




from $/USG

70 16 Aug 13 3.73 +0.10 20 Aug 13 3.63 +0.10

75/80 16 Aug 13 3.73 +0.10 20 Aug 13 3.63 +0.10

100/120 16 Aug 13 3.65 +0.10 26 Jul 13 4.07 +0.25 08 Aug 13 3.62 +0.10 20 Aug 13 3.63 +0.10

200/220 16 Aug 13 4.00 +0.10 26 Jul 13 4.37 +0.25 08 Aug 13 4.00 +0.15 20 Aug 13 3.95 +0.10

600 16 Aug 13 4.60 +0.10 26 Jul 13 5.20 +0.25 08 Aug 13 4.55 +0.10 20 Aug 13 4.52 +0.05

cdxXLusPosted150Week: US domestic SN 150 vs posted prices $/USG

hhh

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3.20

3.40

3.60

3.80

4.00


US SN 150 ExxonMobil HollyFrontierPaulsboro

Us domestic sn 150 vs posted prices $/UsG

cdxXLusPosted600Week: US domestic N600 vs posted prices $/USG

hhh

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4.50

5.00

5.50


US N600 Phillips 66 Chevron MotivaFHR

Us domestic n600 vs posted prices $/UsG

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Us posted pRIces $/t

*the column shows the price difference between the current and previous posted price. The $/t price is converted from the $/USG price.Refer to www.argusmedia.com for methodology with the gallons-to-tonnes conversion factors.

Group I *

exxonmobil Gulf coast HollyFrontier Paulsboro Refining east coast calumet shreveporteffective

from $/t effective

from $/t effective

from $/t effective

from $/t

70/75 23 Aug 13 1,119.10 +21.70

100 16 Aug 13 1,130.36 +46.20 23 Aug 13 1,111.88 +21.56 21 Aug 13 1,203.44 +46.05

150 16 Aug 13 1,138.97 +46.05 23 Aug 13 1,163.53 +21.49 21 Aug 13 1,165.72 +45.30

250 23 Aug 13 1,194.72 +21.28

300/350 16 Aug 13 1,169.58 +45.45

500 23 Aug 13 1,331.82 +45.30 21 Aug 13 1,311.00 +45.00

600/650 16 Aug 13 1,260.54 +44.70

700 16 Aug 13 1,260.54 +44.70 21 Aug 13 1,302.40 +44.40 21 Aug 13 1,505.30 +44.71

Bright stock 16 Aug 13 1,354.32 +44.55 23 Aug 13 1,410.75 +44.55 21 Aug 13 1,394.16 +44.40 21 Aug 13 1,415.69 +44.52

Group II *

phillips 66 Gulf coast chevron west coast motiva Gulf coast FHR Gulf coasteffective

from $/t effective

from $/t effective

from $/t effective

from $/t

70 16 Aug 13 1,156.30 +31.00 20 Aug 13 1,125.30 +31.00

75/80 16 Aug 13 1,141.38 +30.60 20 Aug 13 1,110.78 +30.60

100/120 16 Aug 13 1,128.76 +30.92 26 Jul 13 1,257.63 +77.25 08 Aug 13 1,122.20 +31.00 20 Aug 13 1,122.58 +30.92

200/220 16 Aug 13 1,219.00 +30.48 26 Jul 13 1,332.85 +76.25 08 Aug 13 1,220.00 +45.75 20 Aug 13 1,203.76 +30.48

600 16 Aug 13 1,386.90 +30.15 26 Jul 13 1,567.80 +75.38 08 Aug 13 1,374.10 +30.20 20 Aug 13 1,362.78 +15.07

Group II *

calumet shreveport effective from $/t

80 15 Aug 13 1,107.87 +30.86

100 15 Aug 13 1,093.85 +30.73

150 15 Aug 13 1,222.38 +30.64

325 15 Aug 13 1,416.72 +45.70

Group II+ *


from $/t effective

from $/t

50/60 16 Aug 13 1,467.38 +32.25

70/80 19 Aug 13 1,625.40 +31.50 16 Aug 13 1,488.00 +32.00

Group II+ *

exxonmobil Gulf coast effective from $/t

110/130 16 Aug 13 1,211.31 +46.95

190 16 Aug 13 1,188.02 +46.65

Group III *


from $/t effective

from $/t

4cst 19 Aug 13 1,719.90 +31.50 16 Aug 13 1,565.28 +31.75

6cst 19 Aug 13 1,719.90 +31.50

8cst 19 Aug 13 1,713.60 +31.50 16 Aug 13 1,574.39 +31.30

Us base oil exports, imports 000 blcdxXLusImportExport: US base oil exports, imports000 bl

-2,000

-1,000

0

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Jul 12 Nov 12 Mar 13 Jul 13

Exports Imports Net exports EIA

Us base oil production, sales 000 blcdxXLusProduction: US base oil production, sales 000 bl

2,500

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3,500

4,000

4,500

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5,500

6,000

Jul 12 Oct 12 Jan 13 Apr 13 Jul 13

Production Sales EIA

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mARket news And AnALysIs

1s-oils lube unit sees weaker 3Q profit 2south korean refiner s-oils lubricants unit saw profit fall in the third quarter of the year, as rising feedstock costs outweighed higher base oil prices.

The lube unit posted an operating profit of 40.2bn won ($38mn) in the three months to end-June. The profit was 47pc lower than the same period last year and 19pc down from the previous quarter.

Lube and base oil sales of W446.7bn were 17pc lower than the same period last year but 11pc higher than the previous quarter. The rise in sales from the second quarter reflected the increase in sales volume to 30,000 b/d from 26,000 b/d the previous quarter.

S-Oils base oil units have had substantial maintenance this year. The work peaked in the second quarter of the year and finally ended in early August. The lube base oil units operating rate subsequently rose to 90.4pc in the third quarter, up from 70.2pc the previous quarter.

Sales also benefited from higher base oil prices in the third quarter. Asia-Pacific Group II base oil prices averaged $1,031/t in the third quarter, up 1.5pc from the second quarter. European Group III prices averaged $1,257/t in the third quarter of the year, up 0.5pc from the previous quarter. South Korea is Europes largest supplier of premium-grade base oil imports.

But the quarter-on-quarter rise in base oil prices lagged the 5pc increase in crude prices. Crude prices themselves lagged the 5.8pc rise in diesel prices. The result was higher feedstock costs and an increasing incentive to use that feedstock to produce more diesel.

The lube and base oil units operating profit margin subsequently fell to 9pc from 12.3pc the previous quarter. The margin has held below the 10pc level in three of the last four quarters. By contrast, it had held above the 10pc level for 13 quarters in a row until the third quarter of 2012.

cdxXLprofitSoil: S-Oil lube profit margin vs refining profit margin %

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10

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30

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Q3 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

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Lube profit margin Refining profit margin

S-Oil lube profit margin vs refining profit margin % castrol India sales vs raw material costs bn INRcdxXLprofitCastrol: Castrol India sales vs raw material costs bn INR

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4

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9

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Q3 2010

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Q3 2011

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Q3 2012

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Q3 2013

Sales Raw material costs

Lube margins also held below the 16pc profit margin posted by S-Oils petrochemicals unit. But combined with petrochemicals, the two units countered the W168.6bn loss from S-Oils refining operations and helping the company to post a W25.2bn operating profit.

1castrol Indias 3Q profit rises2castrol India, Indias largest independent lubricant supplier, saw its operating profit margin rise in the three months to end-september compared with last year as sales rose while costs fell.

The companys operating profit was 1.42bn rupees ($23mn), up 24pc from the same three-month period a year earlier. Net profit rose 22pc to Rs1.04bn.

Profit rose on the back of firm sales, up 0.3pc to Rs7.23bn. The rise in sales came even as the countrys industrial and economic activity struggled to revive. Indias industrial production rose just 0.1pc in the five months to August. The countrys car sales of 420,667 in the three months to end-September were 2pc higher than last year.

The B2B [business to business] and in particular, the building and construction segment, were under pressure and witnessed lower volumes during the quarter under review, said Castrol Indias managing director, Ravi Kirpalani. This volume drop was partially offset by a strong performance in the personal mobility sector i.e. the passenger car and two wheeler engine oil segments.

The rise in sales coincided with a 4pc drop in costs to Rs58.14bn on the back of lower sales promotions costs. Raw materials costs rose, but the 3pc increase to Rs40.03bn also lagged far behind the rise in sales.

Raw material costs rose even as imported cargo prices for Group II N150 base oils fell 1pc in the third quarter of this year to an average of $1,068/t cfr India. But the value of the Indian currency relative to the US dollar slumped during the third quarter of this year to its

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weakest level on record, increasing the cost of imports.With sales rising and costs falling, Castrol Indias

operating profit margin improved to 19.6pc from 15.9pc for the same period a year earlier.

The company forecast that high crude and base oil prices, as well as Indias slow economic growth and volatile currency, are likely to affect growth and margins in the short term.

1mexicos september base oil output rises2mexicos base oils production rose in september for a 12th straight month, ahead of the planned shutdown of the countrys only base oils unit in October.

Base oils output from state-owned oil firm Pemexs 245,000 b/d Salamanca refinery totalled 4,340 b/d in September. The volume was 22pc higher than the same month a year earlier and 9pc higher than August volumes. Total production of 1.31mn bl in the first nine months of the year was 30pc higher than the same period last year. The rise in base oils output in September outpaced the 1.5pc increase in processing rates at the Salamanca refinery from the previous month to 167,523 b/d. But it lagged the 24pc rise in asphalt output to 11,652 b/d.

The 305,000 t/yr Group I base oils unit at the Salamanca refinery began a one-month shutdown around mid-October. The shutdown had been delayed from earlier in the summer.

The rise in domestic base oil output this year has allowed Pemex to boost domestic sales, curbing Mexicos requirement for imports. Pemexs base oil and lube sales of 4,515 b/d in September were 16pc higher than the same month a year earlier and 2pc higher than the previous month.

Mexicos base oil imports fell to 26,318 kilolitres (23,000t) in July, their lowest level for the month of July in at least six years. Imports from the US have fallen by

mexican base oil production 000 tcdxXLmxProductionLine: Mexican base oil production 000 t

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5

10

15

20

25

Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13

Production

more than 45pc in the first seven months of the year. Even with this months shutdown of the Salamanca refinerys base oils plant, Mexican demand for base oil imports has failed to revive.

The drop in buying interest also reflects the impact of the countrys slowing economic and industrial activity. The countrys automobile sales and production fell in September for the first time in six months.

1europes August lube sales mixed2spanish and French lubricating oil demand fell in August, contrasting with a rise in Uk and German sales. Italian lubricating oil demand rose in september after holding steady the previous month.

Spanish lube sales fell 5pc in August to 22,500t after rising the previous month. The drop was slower than the 7.5pc fall in sales during the first eight months of the year, coinciding with signs that the countrys car sales have bottomed out.

French lubricating oil demand fell 6pc in August to 35,683t. The fall outpaced the 4pc drop in sales during the first eight months of the year. French industrial production contracted by 3.5pc in August, its steepest drop since November.

Italian lube demand rose 9pc in September to 36,000t. The rise in sales helped to narrow the contraction in demand in the first eight months of the year to just 0.7pc. The steadier lube demand came even as the countrys car sales contracted in September for a 25th straight month.

UK lubricating oil sales rose for a third straight month in August, climbing 4pc to 34,000t. But base oil and lubricating oil production slumped by 70pc in August to just 14,000t. Output of 237,000t in the first eight months of the year is 24pc lower than the same period last year.

european lubricating oils demand 000 tcdxXLdemand_de_uk_es: European lubricating oils demand 000 t

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Spain UK Germany France

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Argus Base oils web packageArgus Base Oils data and analysis are available via Argus Web- a comprehensive online service. Instant price updates: Receive daily forward curve price updates via email, PDA or web. Data downloads: Argus Base Oils price data can be downloaded into a spreadsheet for further use in analy-sis, reporting, data correlation and studies Report archives: Access past reports to print for refer-ence to contracts and settlements Keyword search: Allows subscribers to search for data and articles by keywordPlease contact us at [email protected] for more information on the Argus Base Oils web package.

1Germanys August lube demand rises2Germanys lubricating oil demand rose in August for a fifth straight month, boosted by strong sales of motor and process oils.

Total lubricating oil sales rose 3pc in August to 79,553t, according to Germanys federal office of economics and export control. Total sales of 706,161t were 4pc higher than the same period last year. Motor oil sales rose 20pc in August to 21,941t. The size of the increase reflected a low base for the same month last year, as well as signs that the slowdown in German car sales and production is bottoming out.

German car sales contracted 1pc in September. But that was an improvement from the 6pc fall in sales in the first nine months of the year. German car production rose 9pc in August to 394,991, outpacing the 2pc contraction in output during the first eight months of the year.

Process oil sales rose 15pc in August to 15,142t. Demand for machine oils and transformer oils also rose strongly. Germanys industrial production rose by 0.4pc in August, equalling its fastest pace of growth since March 2012.

Germanys base oils production of 58,316t in August was 9pc lower than the same month last year. But the volume was the second-highest level this year.

1Idemitsu starts output from Indian lube plant2Japanese refiner Idemitsu kosan has begun producing engine oils from a new lubricant plant in maharashtra state on Indias west coast.

Idemitsu Lube India, a unit of Idemitsu Kosan, completed construction of its first lube plant in India in August. The plant, about 65km southeast of Mumbai, has capacity of 70,000 kilolitre/year (62,000 t/yr), although current production is below this level.

Malaysias state-owned oil firm Petronas said last week it planned to build a 60,000 t/yr lube plant near Mumbai.

Idemitsu has already started selling lubricants directly to customers in India, a company spokesman said.

Savita Oil Technologies, one of Indias largest independent lubricant blenders, had previously produced and sold Idemitsus Genuine Oil brand of lubricants through a 10-year technical and marketing agreement signed in 2006. Idemitsu ended the deal last year.

Prista to build re-refinery in Ukraine2Bulgarian l

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