Argus - Base Oil - Jan 2018 PDF

Argus Base Oils
Base oil market prices, news and analysis
Issue 18-04 | Friday 26 January 2018
prices at a glance
Asia-Pacific $/t Europe $/t

Low High ± Low High ±
Group I Group I
SN 150 ex-tank Singapore 745.00 785.00 +5.00 SN 150 fob domestic NWE 735.00 780.00 +5.00
SN 500 ex-tank Singapore 860.00 900.00 +5.00 SN 500 fob domestic NWE 820.00 860.00 +5.00
Bright stock ex-tank Singapore 955.00 995.00 nc Bright stock fob domestic NWE 890.00 930.00 nc
SN 150 fob Asia 675.00 715.00 +10.00 SN 150 fob European export 710.00 750.00 +10.00
SN 500 fob Asia 790.00 830.00 +20.00 SN 500 fob European export 770.00 810.00 +10.00
Bright stock fob Asia 885.00 925.00 +20.00 Bright stock fob European export 825.00 865.00 +5.00
Group II Group II
N150 ex-tank Singapore 780.00 820.00 +10.00
N150 fca ARA 845.00 885.00 nc
N600 fca ARA 955.00 995.00 nc
N150 fob Asia 695.00 735.00 +5.00
Group III
N500 fob Asia 785.00 825.00 +5.00
4cst fca NWE 993.00 1,049.00 +21.50
Northeast Asia $/t 6cst fca NWE 1,031.00 1,081.00 +22.50
Low High ± 8cst fca NWE 987.00 1,043.00 +21.50
Group I Russia and FSU $/t

SN 150 cfr 660.00 700.00 +5.00 Low High ±
SN 500 cfr 840.00 880.00 +30.00
Group I
Bright stock cfr 945.00 985.00 +25.00
Group II SN 150 fob Baltic Sea 620.00 660.00 +10.00
N150 cfr 690.00 730.00 +5.00 SN 500 fob Baltic Sea 710.00 750.00 +10.00
N500 cfr 820.00 860.00 +5.00 SN 150 fob Black Sea 580.00 630.00 +10.00
SN 500 fob Black Sea 640.00 690.00 +10.00
India and UAE $/t
Low High ± US $/t
Low High ±
Group I
SN 150 (LVI) cfr India 715.00 755.00 +5.00 Group I
SN 500 (LVI) cfr India 825.00 865.00 +5.00 SN 150 fob 661.00 709.00 +6.50
Bright stock cfr India 915.00 955.00 nc SN 500 fob 757.00 805.00 +9.00
SN 150 (LVI) cfr UAE 735.00 775.00 +5.00 Bright stock fob 814.00 861.00 nc
SN 500 (LVI) cfr UAE 810.00 850.00 +5.00 Group II
Group II N100 fob 667.00 716.00 +6.50
N150 cfr India 770.00 810.00 +5.00 N220 fob 671.00 720.00 +6.00
N500 cfr India 840.00 880.00 nc
N600 fob 762.00 810.00 +9.00
Crude oil and gasoil futures Group III (domestic)
± 4cst 914.00 964.00 +13.00
6cst 917.00 967.00 +13.00
Ice Brent front month ($/bl) 70.42 +1.11 8cst 961.00 1,014.00 +14.00
Ice gasoil front month ($/t) 627.25 +15.50
Naphthenic base oils
Pale oil 60 fob 670.00 717.00 +6.00
Overview Pale oil 100 fob 674.00 721.00 +6.00
Pale oil 500 fob 652.00 698.00 +6.00
Pale oil 2000 fob 659.00 705.00 +3.00
Global base oil prices have extended their rise on the back
of more limited spot supplies and higher feedstock costs. Contents
The removal of surplus cargoes has given producers in mar-
kets such as the US and Europe more leverage to raise their Global trade flows, freight rates, feedstock fundamentals 2-3
prices. At the same time, widespread expectations of even Markets4-22
higher prices have triggered a pick-up in demand as buyers News and analysis 23-25
seek to build stocks early to lock in prices at current levels. Maintenance and market fundamentals 26-28
Copyright © 2018 Argus Media group

Argus Base Oils Issue 18-04 | Friday 26 January 2018
Argus Market Map
fob Baltic Sea

fob European export SN 150 640.00
SN 150 730.00 SN 500 730.00
SN 500 790.00
cfr NE Asia
N150 fca ARA 865.00
SN 150 680.00
N600 fca ARA 975.00 fob Black Sea
SN 500 860.00
SN 150 605.00
N150 710.00
SN 500 665.00
N500 840.00
cfr UAE (LVI)

SN 150 755.00
SN 500 830.00
fob US export cfr India
fob Asia
SN 150 685.00 SN 150 (LVI) 735.00
SN 150 695.00
SN 500 781.00 SN 500 (LVI) 845.00
SN 500 810.00
N100 691.50 N150 790.00
N150 715.00
N600 786.00 N500 860.00
N500 805.00
Freight rates (US) * $/t Arbitrage opportunities - Group I $/t

Route 1,000t 3,000t 5,000t 10,000t Second centre less SN 150 SN 500
first centre This Prior This Prior
US Gulf coast-Rotterdam 80 55-60 49-50 44-48
week week week week
US Gulf coast-Brazil 78-82 60-63 50-54 44-46
US Gulf coast-Far East 135 86-90 75-80 70-74 Europe export-Singapore +35.00 +40.00 +90.00 +95.00
US Gulf coast-India 120 92-95 80-82 70-72 Baltic Sea-Singapore +125.00 +130.00 +150.00 +155.00
* rates for January 2018, provided by SPI Marine (www.spimarineusa.com)
Europe export-UAE (LVI) +25.00 +30.00 +40.00 +45.00
Freight rates (Asia-Pacific) * $/t Asia-US domestic +2.00 +6.00 -29.00 -9.00
Route 3,000t 5,000t Europe export-US domestic -33.00 -29.00 -9.00 +1.00
Singapore-WC India 43.50 40.50 Black Sea-India (LVI) +130.00 +135.00 +180.00 +185.00
Singapore-Indonesia 27.50 24.00 Asia-India (LVI) +40.00 +45.00 +35.00 +50.00
Singapore-Thailand 29.00 25.50 Baltic Sea-US domestic +57.00 +61.00 +51.00 +61.00
Singapore-central China 42.50 37.50
Baltic Sea-domestic NWE +117.50 +122.50 +110.00 +115.00
Singapore-Japan 55.00 50.00
US export-Singapore +80.00 +81.50 +99.00 +103.00
S.Korea-WC India 59.00 52.00
S.Korea-Singapore 37.00 31.00
Arbitrage opportunities - Group II $/t
S.Korea-Japan 27.00 21.00
Second centre less N100/N150 N500/N600
S.Korea-central China 28.00 24.00
first centre This Prior This Prior
S.Korea-Taiwan 29.00 26.00
week week week week
Japan-central China 44.00 36.00
S.Korea-US Gulf coast 68.00 59.00 Asia-ARA +150.00 +155.00 +170.00 +175.00
S.Korea-Europe 108.00 93.00 Asia-US domestic -11.00 -12.50 -10.00 -11.00
Mideast Gulf-WC India 37.00 32.00
Asia-India +75.00 +75.00 +55.00 +60.00
Mideast Gulf-central China 59.00 53.00
US export-ARA +173.50 +180.00 +189.00 +198.00
* rates based on one port loading/one port discharge
* rates provided at market close on 18 January by SPI Marine US export-India +98.50 +100.00 +74.00 +83.00
(www.spimarineasia.com) US export-Singapore +108.50 +105.00 +109.00 +108.00
Copyright © 2018 Argus Media group Page 2 of 29

Feedstock Fundamentals
Global base oil prices have steadied relative to competing The round of scheduled plant maintenance in the first
and feedstock prices, as tighter supplies and firmer demand half of this year is so far much lighter than the same period
supported higher outright prices. last year. At the same time, some Group I capacity in north-
Domestic European SN 150 base oil price premiums to east Asia is set to come back on line in the coming weeks. It
30-day-average Ice gasoil futures have dropped to $149/t, has been off line since last January.
below year-earlier levels of $152/t. The SN 500 premium has New production capacity is also set to start up. A new
edged down to $231/t, versus around $222/t at the same Group II base oil unit in Saudi Arabia had been expected to
time last year. The SN 150 premium to four-week-average start commercial operations in the fourth quarter of last
vacuum gasoil (VGO) prices has fallen to $260/t. year. There are now growing signs that supply from the unit
The Group II N150 premium to gasoil has fallen to $256/t, will soon be available.
although it remained much higher than year-earlier levels Some buyers that had expected to receive supplies from
of $182/t. The Group III 4cst premium was steady at $395/t, the unit during the fourth quarter of last year turned instead
versus around $213/t the same time last year. to other producers to cover the shortfall. The move spurred
US domestic N100 base oil price premiums to 30-day US stronger demand for premium-grade supplies from Asia-
heating oil futures have held steady at $0.20/USG, still well Pacific and the Mideast Gulf. The trend added to Asia-Pacific
above year-earlier levels of $0.03/USG. But the N600 pre- producers’ relative supply tightness during the last few
mium remained weak at just $0.58/USG, down from around months of last year.
$0.80/USG the same time last year. The N100 premium to But producers in northeast Asia are now starting to face
VGO has dropped to $0.42/USG. more push-back from some buyers in markets like India. De-
The Group III premium to heating oil has risen to $0.91/ mand in that market typically peaks around this time of the
USG. But it still lagged levels around $1.04/USG the same year. The stronger fundamentals in turn typically support
time last year. firmer base oil prices.
In Asia-Pacific, the premium of ex-tank Singapore SN But buyers in Mideast Gulf and India are now holding
150 to Ice gasoil has slipped to $156/t, versus around $148/t more plentiful supplies after securing large volumes from
the same time last year. The SN 500 premium has dropped the US and Europe in recent months. They are also now
to $271/t, although it remained above year-earlier levels of starting to factor in the delivery of those new Group II sup-
$258/t. The SN 150 premium to four-week-average high- plies. That is in turn prompting them to resist price levels
sulphur fuel oil has risen to $386/t. from Asia-Pacific producers that they deem to be too high.
The Group II N150 premium to gasoil edged up to $191/t Tighter availability of spot volumes in the US in the
and remained well above year-earlier levels of $128/t. The coming months could curb the impact of any such pick-up
N500 premium steadied at $286/t, but was still below year- in regional supply. An expected seasonal rise in Chinese
earlier levels of $323/t. demand would also likely prompt Asia-Pacific producers to
Base oil values relative to crude and diesel have fallen move more supplies to that market. That would also limit
increasingly close to year-earlier levels in most markets. This any impact of rising supplies in the Mideast Gulf market.
time last year, outright prices then began to rise faster than Rising crude prices are also putting pressure on producers to
feedstock and diesel prices on the back of a seasonal rise in increase their prices.
demand combined with unexpectedly tight supply. But the market dynamic is different. Last year, producers
Demand this year is similarly starting to revive in had leverage to implement price increases at a time when
markets like Europe and US. It has already been strong for buyers were struggling to cover their requirements. The
many months in India, although Chinese demand remains higher prices spurred a rise in base oil values versus crude to
muted. Supply is also tighter after producers in Europe and their highest levels in several years. This year, more plentiful
US cleared out an overhang of surplus cargoes this and last supply means buyers are covering requirements more easily.
month. Asia-Pacific producers already began this year with That is curbing the kind of leverage that producers had last
tighter-than-usual stocks. year.
The firmer fundamentals have already begun to support
higher outright prices. But the supply-side fundamentals are
beginning to diverge from last year’s pattern.

Asia-Pacific
Asia-Pacific base oil prices have held firm as strong demand Group I $/t
Low High ±
in southeast Asia countered slower buying interest in other
markets such as India. SN 150 ex-tank Singapore 745.00 785.00 +5.00
Term buyers have sought additional supplies amid a SN 500 ex-tank Singapore 860.00 900.00 +5.00
Bright stock ex-tank Singapore 955.00 995.00 nc
round of stockbuilding in preparation for the spring oil-
SN 150 fob Asia 675.00 715.00 +10.00
change season. Rising crude prices have supported expecta-
SN 500 fob Asia 790.00 830.00 +20.00
tions that prices will extend their gains. That has removed Bright stock fob Asia 885.00 925.00 +20.00
concern about exposure to a price drop and added to
Group II $/t
demand as buyers seek to lock in more supplies at current
Low High ±
price levels.
Buyers are also seeking to avoid the kind of tightness
that they faced during the first few months of last year. N150 fob Asia 695.00 735.00 +5.00
Stronger domestic demand in markets such as Thailand in N500 fob Asia 785.00 825.00 +5.00
the months of March and April typically curbs spot volumes
Group III $/t
from those markets during that period. Upcoming plant Low High ±
maintenance is also curbing availability of some supplies.
4cst ex-tank Singapore 885.00 945.00 +5.00
A preference for supplies for prompt delivery has also
6cst ex-tank Singapore 880.00 940.00 +5.00
limited any buying interest in supplies from other markets
Ex-tank Singapore reference prices $/t
such as Russia. These would only arrive in close to two
Group I Group II
months’ time. SN 150 SN 600 Bright stock N150 N500
805.00 970.00 1,005.00 845.00 955.00

Producers’ supplies remain tight
The strong demand has left the region’s Group I producers Crude $/bl
with scant spot availability. It has countered for now the ±
relative lack of plant maintenance work in markets such as Dubai crude front month 67.50 +1.03
Japan this year. The closed arbitrage and tighter availability SN 500 premium to Dubai crude 46.66 +1.79
in Europe has also left buyers with only regional suppliers to Oil products $/bl
turn to for their requirements. ±
Demand for Group II heavy grades has also begun to re- Singapore 0.05% gasoil 83.60 +2.90
vive amid expectations of a pick-up in requirements for and Gasoil premium to Dubai crude 15.61 +1.37
prices of the product over the coming months. SN 500 premium to gasoil 30.56 -0.08
But blenders’ requirements could slow down over the Asia SN 500 forward prices $/t
coming weeks as lube units in markets such as China and Low High ±
Taiwan curb or halt operations during the lunar new year Feb 2018 800.00 820.00 +20.00
holidays in second-half February. Mar 2018 799.60 819.60 +20.40
Chinese demand has anyway remained unusually muted Apr 2018 796.45 816.45 +20.75
and focused on certain products like Group I heavy grades. 2Q 2018 793.15 813.15 +19.95
Demand in India is slower as buyers await the arrival of a 3Q 2018 785.50 805.50 +19.55
The price shows the implied forward-curve base oil price required to maintain
swathe of Group I and Group II supplies from US and Europe.
its existing profit margin relative to Ice gasoil futures.
Even demand in southeast Asia was also targeting certain Refer to www.argusmedia.com for methodology
products like Group I light and heavy neutrals, with less Asia SN 500 forward premium to gasoil $/t
interest in additional volumes of bright stock. Midpoint ±
Feb 2018 199.85 +12.85

Mar 2018 200.30 +12.45
Apr 2018 203.45 +12.15
2Q 2018 206.75 +12.90
3Q 2018 214.45 +13.30
The 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
Different markets seek different products Vessel enquiries: Asia-Pacific t

Loading port Next port B/L Date Volume
Different buyers’ different requirements were soaking up
supplies for now. Strong Chinese demand for SN 500 and Mumbai Jakarta Prompt 5,000
bright stock has supported a sharp rise in prices for supplies Shanghai Singapore Feb 700
Source: shipping agents, brokers
of southeast Asian origin. Late-January and February-loading
cargoes of SN 500 and bright stock of Thai origin were sold
at levels some $40-50/t higher than the previous month.
But there was little Chinese buying interest in other prod- Ex-tank distributors seek more supplies
ucts like SN 150, and little buying interest outside China for Distributors in Singapore’s ex-tank market were seeking
bright stock. more supplies of light and heavy grades in response to
Japan’s producers had no spot supplies for February as strong demand and tight supplies. The strong buying interest
they covered a surge in demand from term buyers, espe- has prompted the distributors to seek more supplies from
cially in southeast Asia. producers. But they had no surplus supplies available. One
The region’s Group II producers also had limited spot distributor has fully sold out of replenishment supplies even
supplies, especially of light grades. They were turning down though they have yet to be delivered.
requests for additional volumes even from term buyers. There were also scant signs of any significant switch in
demand to heavy grades and away from light grades. Rather,
Refiners produce more heavy grades distributors continued to target even higher prices for the
Several refiners were expected to produce a larger volume light grades. Buyers were accepting these price levels with
of heavy grades this year at the expense of light-grade sup- little pushback.
plies. The move was partly strategic, reflecting moves to tap Prices for Group II N150 were at least $800/t ex-tank,
the typically wider premium of heavy grade supplies over up by $10-20/t from last week. Offers for N500 were in an
light grades. $880-910/t ex-tank range. There was strong demand for the
The larger volume of these supplies has been reflected supplies at the lower price level.
in increased term volumes of the product in markets seeking Prices for Group I SN 500 were at $890/t ex-tank. Tight
more heavy grades. Japanese supply was curbing moves to secure more of this
But term volumes have been slashed for Indian buyers, grade. Offers of bright stock held at around $960-970/t ex-
which typically seek mostly light-grade supplies. One pro- tank.
ducer has some spot volumes of light grades for that market A major regional producer informed customers that it is
for February. Buyers are targeting prices similar to January raising its Group I and Group II prices again with effect from
levels amid waning urgency to secure more supplies. 10 February. The price-increase would be its second in less
than a month. Its most recent price-increase came into ef-
Vietnam buyers seek heavy grades fect on 20 January.
The wave of buying interest in Vietnam for Group II light Prices for Group III supplies with approvals were steady
grades has waned. A large volume of these supplies from a at $975/t ex-tank for 4cst and 6cst supplies, and at $890/t
South Korean producer was sold into that market at compet- for 3cst supplies.
itive prices in recent weeks. Instead buyers in that market
have suddenly switched to seeking Group II heavy grades.
Prices for those supplies are at unusually narrow premiums Complimentary Argus Forum:
to light grades. Expectations that that premium to light Global Base Oil Outlook in 2018
grades will soon start to widen has prompted buyers to seek 21 February 2018 | 3.30pm | London, UK
more of those supplies now. Unexpectedly tight base oil supply defined the year 2017 in every major market
because of a combination of a heavy round of plant maintenance and a steady
Chinese demand for Group II heavy grades was also stream of unforeseen plant shutdowns. The supply-tightness transformed
procurement patterns and changed arbitrage flows. The repercussions are set
expected to rise over the coming weeks amid a seasonal to extend at least into early 2018.
switch in lubricant formulations. Buyers in that market had
The seventh Argus Base Oil Forum will look back at some of the key events that
reoffered to overseas markets several term cargoes of light- fed the tightness in 2017, and look forward to how those events are likely to
impact the market over the coming months.
grade base oils in recent weeks. But they have held onto
their heavy-grade supplies. The price spread between light For more information or to register:
Email: info@argusmedia.com | Call :+44 (0) 20 7780 4200
and heavy grade supplies in that market is also narrower
illuminating the markets
than usual for the time of year.

NorthEast Asia
Northeast Asia base oil prices have mostly risen, supported Group I $/t
Low High ±
by tighter supplies of products such as bright stock.
Many consumers have continued to buy supplies on a SN 150 cfr 660.00 700.00 +5.00
need-to basis. They have been expecting prices to hold SN 500 cfr 840.00 880.00 +30.00
steady or ease as spot availability increases. Supply had Bright stock cfr 945.00 985.00 +25.00
tightened late last year because of several plant shutdowns

in China and northeast Asia. Those plants have now resumed Group II $/t
Low High ±
operations.
A wave of overseas cargoes has also reached China in N150 cfr 690.00 730.00 +5.00
recent weeks. These have replenished term buyers’ stocks N500 cfr 820.00 860.00 +5.00
and added to market availability. Some of those shipments

have been moving to China this month to avoid logistical Group III $/t
Low High ±
complications next month during the lunar new year holiday
period. 4cst cfr 825.00 875.00 +5.00
6cst cfr 820.00 870.00 +5.00
Demand remains muted 8cst cfr 785.00 835.00 +5.00
The muted buying interest contrasted with the wave of

demand around this time last year. It has prompted some Ex-tank East China
Yn/t $/t
distributors to hesitate over replenishing their stocks. Oth-
ers anticipated a strong rise in demand and prices after the
lunar new year holidays in mid-February. Group II
The sustained rise in crude prices and steadier diesel N150 7,750.00 7,950.00 nc 1,226.00 1,258.00 +18.50
N500 8,700.00 8,900.00 nc 1,377.00 1,408.00 +21.00
prices has added to those expectations. It has also boosted
Group III
distributors’ confidence to bid at higher levels for replenish-
4cst 9,150.00 9,550.00 nc 1,448.00 1,511.00 +22.50
ment supplies.
6cst 9,175.00 9,575.00 nc 1,452.00 1,515.00 +22.50
But they were more comfortable for now to pay higher 8cst 8,950.00 9,250.00 nc 1,416.00 1,464.00 +22.00
prices for certain products like Group I heavy grades.
Prices for these heavy-grade base oils in China typically
start to rise strongly versus light grades around this time China domestic prices
of year. But such a pattern has so far yet to extend to the Yn/t $/t
Group II market. Low High ± Low High ±
Expectations of the tighter enforcement of consumption Group I, SN 150

tax rules has prompted more buyers to seek supplies cat- Northeast
egorised as base oils rather than a different category such Daqing 6,900.00 7,000.00 nc 1,092.00 1,108.00 +17.00
as white oils. These base oil supplies include the additional Dalian 6,900.00 7,000.00 nc 1,092.00 1,108.00 +17.00
North
cost of the consumption tax. That has in turn narrowed their
Yanshan 7,000.00 7,100.00 nc 1,108.00 1,124.00 +17.50
discount to prices for supplies from overseas markets and
South
boosted the attraction of those supplies.
Maoming 7,050.00 7,150.00 nc 1,116.00 1,131.00 +17.50
But many producers have continued to offer their sup- Group I, SN 400
plies under other categories such as white oils or heat trans- Northeast
fer oils. These avoid the need to add the consumption tax. Fushun 7,800.00 7,900.00 nc 1,234.00 1,250.00 +19.00
Prices for Group I supplies from PetroChina’s Dalian Dalian 7,700.00 7,800.00 nc 1,218.00 1,234.00 +18.50
plant were steady at 7,100 yuan/t ($1,122/t) for SN 150 on South
an ex-tank basis in northeast China. Prices for SN 400 were Maoming 7,700.00 7,800.00 nc 1,218.00 1,234.00 +18.50
at Yn8,000/t and at Yn8,200/t for SN 650. Prices for SN 400 Group II, N150
were some Yn250/t higher in Beijing, where supplies were East

Gaoqiao 7,100.00 7,200.00 nc 1,124.00 1,139.00 +17.50
tighter.
South
Huizhou 6,700.00 6,800.00 nc 1,060.00 1,076.00 +16.00

NorthEast Asia
Tight supplies support bright stock China import price calculator *

Yn/t $/t
Prices for bright stock faced further upward pressure amid a
sharp rise in the cost of replenishment supplies. Offers were
holding around Yn9,500/t ex-tank in east China. But availabil- Group I (imported prices)
ity was tight. Supplies from PetroChina’s Karamay plant were SN 150 7,175.00 7,488.00 -43.50 1,135.00 1,185.00 +11.00
SN 500 8,586.00 8,899.00 +133.50 1,359.00 1,408.00 +42.00
available at around Yn9,500/t.
Bright stock 9,409.00 9,722.00 +81.00 1,489.00 1,538.00 +35.50
The tightness reflected the limited number of sources for
Group II (imported prices)
these supplies to just several producers in southeast Asia.
N150 7,410.00 7,724.00 -47.00 1,173.00 1,222.00 +11.00
The arbitrage was unworkable from other markets. N500 8,429.00 8,742.00 -63.00 1,334.00 1,383.00 +11.00
But availability from those producers in southeast Asia * inc. 6% customs duty, 17% VAT and 1,711.50 Yuan/t consumption tax.
was also limited. Competition to secure the supplies has
triggered a sharp rise in prices. The latest shipments were
being sold into China at more than $960/t cfr. The price was
up by close to $100/t in little more than two months.
The impact of that price rise has been partially muffled Prices for Group II N150 of Taiwan origin mostly held firm
by the slide in the value of the US dollar versus the Chinese in a narrow Yn7,800-7,900/t ex-tank range in east China. Of-
currency. fers for heavy grades held at around Yn8,750-8,800/t.
Demand for Group I SN 500 has also revived, while the
number of overseas sources with spot volumes remained lim- Producers face stockbuilds
ited. The firmer fundamentals have supported a rise in cargo Domestic producers mostly kept their prices steady. A sea-
prices to more than $850/t cfr. These prices were higher sonal rise in buying interest has yet to materialise. Rather,
than supplies for Group II heavy grades. some sellers were facing the prospect of rising stocks amid
slower demand. Sellers were now anticipating a pick-up in
Buyers seek Russian supplies demand once normal activity resumes after the lunar new
The firm demand for Group I supplies spurred several dis- year holidays.
tributors to seek more February-loading supplies offered by Prices for supplies from CNOOC’s Huizhou plant held steady
Russian producer Rosneft. The producer offered through a at Yn6,800/t ex-refinery for N150 and Yn6,500/t for N60.
tender last week more than 5,000t of Group I supplies. Supplies were also available from CNOOC’s Taizhou plant.
Buyers bid for the light and heavy grades, but they mostly Offers of N150 were at around Yn6,150/t ex-refinery, and
secured some of the heavy grades. N100 at Yn6,250/t. But demand was muted amid uncertainty
Prices for Group I light grades of Russian origin were at about the stability of some of the specifications of the
around Yn7,100-7,300/t ex-tank in Beijing, or the equivalent products.
of around $626-639/t daf Erlian. Supplies of SN 450 and SN Panjin Northern Asphalt kept its prices steady at
650 were just below the Yn8,000/t level. Prices for SN 1200 Yn6,406/t ex-refinery for N100, Yn7,306/t for N150 and
and bright stock were at around Yn8,400-8,500/t ex-tank. Yn8,106/t for N350. Demand was steady. The producer’s
plant was taken off line earlier this week for a month amid
Group II prices stay rangebound insufficient feedstock supplies.
Group II prices have held firm. But there has been no surge Other producers in Shandong province also maintained
similar to the rise in prices for Group I heavy grades. steady base oil values amid balanced demand and steadier
Imported cargo prices have risen. But the impact was diesel prices.
being softened by the depreciation of the US dollar versus Group III prices have held firm. More supplies from the
the Chinese yuan. Mideast Gulf were being lined up to move to China. The
Some distributors were struggling to secure replenish- higher cargo price for the shipment was likely to be re-
ment supplies from Taiwan as term buyers held onto these flected in an increase in domestic prices for these supplies,
volumes or diverted them to other markets. The move was to closer to or above the Yn9,000/t level. Prices for supplies
tightening spot availability even as shipments from Taiwan with approvals remained at levels some Yn600-700/t higher
surged this month to their highest level in two years. But ex- than that.
ports are likely to fall back next month when vessel loadings Wholesale diesel prices in east China were steady at
are disrupted by the lunar new year holidays. around Yn6,250/t.

India
Indian base oil prices have risen at a slower pace. Buyers Group I $/t
have mostly covered their requirements for now after they Low High ±
secured a swathe of spot supplies late last year and early SN 150 cfr 735.00 775.00 +5.00
this year. SN 500 cfr 835.00 875.00 nc
Combined with their term volumes, these supplies have
SN 150 (LVI) cfr 715.00 755.00 +5.00
eased the sustained tightness that buyers faced throughout
SN 500 (LVI) cfr 825.00 865.00 +5.00
much of last year. Buyers’ stocks are now sufficient to cover
for the anticipated seasonal rise in finished lube demand Bright stock cfr 915.00 955.00 nc
over the next two months, before the end of India’s financial
year at end-March. Group II $/t
But many buyers were also open to securing more sup- Low High ±
plies if the price offers were deemed to be attractive.
N150 cfr 770.00 810.00 +5.00
The sustained interest in additional supplies reflected
N500 cfr 840.00 880.00 nc
expectations that prices would continue to trend higher over
the coming months. Like last year, they expected a drop in
supply caused by maintenance work in markets such as Eu- Group III $/t
rope and Asia-Pacific. Some producers have already cut their Low High ±
term volumes for the whole year to factor in the impact of 4cst cfr 790.00 830.00 +5.00
maintenance work. But the extent and length of the mainte-
6cst cfr 795.00 835.00 +5.00
nance work this year is lighter than last year.
8cst cfr 815.00 855.00 +5.00
Buyers wary of higher crude

Buyers also anticipated persistent upward pressure from Domestic refinery prices
the sustained rise in crude prices. These have already risen Rs/l * ± $/t ±
more than expected to their highest level in more than Group I

three years. Buyers are now wary about further price gains.
IOC prices, Chennai
But even with these gains, light-grade prices remain unusu-
SN 70 66.55 nc 1,286.00 +8.00
ally firm relative to crude.
While the urgency to buy has now waned, importers SN 150 62.65 nc 1,138.00 +8.00
remained more interested in additional supplies of light SN 500 70.25 nc 1,255.00 +9.00
grades. The sustained interest in these supplies has support- Bright stock 82.60 nc 1,446.00 +10.00
ed prices at firm levels versus crude. The discount of these IOC prices, Mumbai
prices to heavy grades has also narrowed sharply. Availability
SN 70 64.55 nc 1,248.00 +9.00
of that product remained more plentiful. But demand was
SN 150 60.65 nc 1,102.00 +8.00
weak.
SN 500 65.75 nc 1,174.00 +7.00
Light-grade availability stays tight Bright stock 81.05 nc 1,418.00 +9.00

Spot availability of light-grade supplies from Asia-Pacific was Group II
set to remain tight. Even term volumes for these supplies IOC prices, Chennai
faced the largest adjustments as producers factored in the
N70 76.72 nc 1,445.00 +9.00
impact of maintenance work in the coming months.
N150 63.45 nc 1,178.00 +8.00
Negotiations were continuing over the sale to Indian
buyers of more supplies of US origin from several different N500 71.01 nc 1,302.00 +9.00
producers. Some of the supplies were deemed suitable for IOC prices, Mumbai
white oils. Most of these supplies were now mid-viscosity or N70 68.85 nc 1,297.00 +9.00
heavy-grade supplies.
N150 61.45 nc 1,141.00 +7.00
N500 66.95 nc 1,228.00 +9.00

* prices in Rs/l effective from 01 Jan

India
Prices for light or very light grades were slightly above Vessel enquiries: India t
the $800/t cfr level. Prices for heavy grades were around
$830-850/t cfr. But interest in securing even more of these USGC WCI 1H Feb Up to 15,000
supplies has begun to ebb unless prices were at attractive Sitra Mumbai/ARA Prompt Up to 5,000
Yanbu Mumbai 20-30 Jan Up to 11,500
levels. Smaller buyers also faced difficulty paying for more
Mumbai Jakarta Prompt 5,000
supplies. They have maximised their credit limits following a
wave of recent buying.
The first of the recent wave of spot shipments from the
US is now starting to reach India. price was at a discount to current price levels. Like recent
Spot availability of premium-grade supplies from South shipments of these supplies, the cargo was likely bound for
Korean producers remained limited. There was a small term buyers.
volume of light grades, as well as more regular availability of Buyers have also secured large volumes of Group III
heavy grades. But buyers have also seen their term volumes supplies from another producer for delivery this and next
cut sharply. month.
Domestic refiners had available a small volume of Group
Buyers await new supplies I and Group II supplies. But frequent production issues and
Shipments to India from a new Group II unit in the Mideast the refiners’ surge in their posted prices this and last month
Gulf were expected to start next month. Some buyers have has dampened interest in the volumes.
already received samples of these new base oils. Others
were still awaiting these supplies. Buyers have been top- More Europe supplies lined up for India
ping up requirements from other suppliers in recent months More Group I supplies of European origin were being lined up
because of the delayed availability of these new supplies. to move to India. The supplies consisted of heavy grades and
There was less interest in premium-grade supplies from bright stock. Prices were similar to or at a small premium
the Mideast Gulf. Price offers for these supplies have risen, to recent deals. The sale of any such shipment would add to
after their premium to Group II supplies fell to unusually a swathe of cargoes to India from Europe as well as US and
narrow levels. But the higher offers have now increased that Mideast Gulf since late last year.
premium to its highest level in two months. Buyers seeking The latest shipment of Group I supplies from the US was
2cst and 3cst supplies were also required to take a much set to complete loading and head for India before the end
larger share of heavier grades. Several buyers also already of this month. Some supplies from the Mideast Gulf have
secured a large volume of these supplies in December, when already reached India.
prices were lower. Their requirements are covered for now. But there was steady interest in additional volumes in
A cargo of very light-grade supplies was bound for India view of alternative Group I supplies of Iranian origin that
after setting off from Spain at the end of last week. The remained priced at similar levels around $840-850/t cfr.
Indian base oils vs Europe $/t Global Group II base oil prices $/t
SN 150 Bright stock Argus N150 cfr India Argus N150 fob Asia
100 Argus N100 fob US
850
50 800
750
0
700
-50 650
600
-100
550
-150 500
3 Feb 17 2 Jun 17 29 Sep 17 26 Jan 18 3 Feb 17 2 Jun 17 29 Sep 17 26 Jan 18

Mideast Gulf
Mideast Gulf base oil prices have held firm as buyers focused Group I $/t
Low High ±
on building stocks to cover requirements for the next few
months. SN 150 cfr UAE 735.00 775.00 +5.00
SN 500 cfr UAE 835.00 875.00 nc
The move to replenish inventories reflected expectations
SN 150 (LVI) cfr UAE 735.00 775.00 +5.00
that higher crude prices would support a continuing rise in SN 500 (LVI) cfr UAE 810.00 850.00 +5.00
base oil prices over the coming months. Buyers also sought
to cover requirements ahead of an expected slowdown Group II $/t
in supplies from other markets later in the first quarter Low High ±
because of plant maintenance work. Supplies from Iran also
N150 ex-tank UAE 825.00 865.00 +5.00
often face delays during the weeks preceding the Iranian N500 ex-tank UAE 900.00 940.00 nc
new year at end-March.
But many buyers have now completed most such moves
Group III $/t
to build up their stocks. A swathe of Group I and Group II
Low High ±
supplies has been lined up to move to the region from the
US, Europe, Russia and Asia-Pacific. Some supplies are now 4cst ex-tank UAE 800.00 860.00 +5.00
6cst ex-tank UAE 810.00 870.00 +5.00
reaching the region. Some volumes have already arrived. 8cst ex-tank UAE 845.00 895.00 +5.00
Buyers took advantage of the sudden availability of
surplus year-end cargoes in many of those markets to secure Iran export prices $/t
supplies at prices that made workable the arbitrage to the Sepahan Oil * ±
Mideast Gulf. The sustained supply tightness before then,
SN 500+ fob (bulk) NA nc
and the expected rise in prices since then, added to the SN 500 fob (bulk) 820.00 nc
wave of buying. Rubber process oil fob (drum) 500.00 nc
Slack wax fob (drum) 725.00 nc
Paraffin wax fob (slab) 900.00 nc
Buying slows down
Many buyers have now had to slow down any further pro- * base oil prices on a fob Bushehr basis; RPO/slack wax/paraffin wax prices on a
fob Bandar Abbas basis, effective from 12 - 18 December
curement plans after they maximised their credit lines to
secure all of these supplies. When they resume buying, for Vessel enquiries: UAE t
supplies for delivery in the second quarter of the year, most Loading port Next port B/L Date Volume
of the expected disruptions to supply will have passed. That
Sitra Mumbai/ARA Ely Feb Up to 5,000
will curb the need to build larger stocks. Sitra Jebel Ali/BIK Prompt 6,000
Buyers are also now taking delivery of supplies bought Yanbu Mumbai 20-30 Jan Up to 11,500
earlier at prices that are now much more competitive than Leixoes Hamriyah 1H Feb Up to 3,000
current levels. These include supplies of Russian origin that
were bought in December, and priced at levels some $40-
50/t lower than current offers of Russian supplies. A 16,000t Ex-tank prices have held firm at around $850/t for SN
cargo of Russian base oils set sail from the Baltic market 500, and $780-790/t for SN 150. Bright stock was available at
earlier this week bound for the Mideast Gulf. around $950-960/t ex-tank.
Buyers have also seen a slowdown in activity in the lubri- Group II prices have held onto recent gains. Prices for
cants market, partly because of the introduction of a value N150 were around $840-850/t ex-tank, with availability still
added tax in the region from the start of the year. The tax tight. Some offers for N500 were at more than $900/t. But
has required companies to use more time and resources to supplies were available at lower levels than that.
cover this administrative issue. Some buyers were also securing Group III 8cst supplies
Tweaks to the new tax regime have also generated un- instead of N500 in view of its competitive price at around
certainty. A recent clarification has confirmed that compa- $880/t ex-tank.
nies inside free-trade zones in the UAE, such as Hamriyah, Prices for Group III supplies with approvals held in a wide
are exempt from paying VAT for supplies imported from range from $840/t to $880/t ex-tank. Other supplies were
overseas or from other free-trade zones. being sold in cargo volumes within the region once every
couple of months. They were then reoffered on an ex-tank
basis.

Europe
European base oil prices have risen amid tightening spot Group I $/t
Low High ±
availability and higher feedstock costs.
The export market especially is reflecting that tightness SN 150 fob domestic NWE 735.00 780.00 +5.00
amid a marked drop in availability of spot cargoes. SN 500 fob domestic NWE 820.00 860.00 +5.00
Many buyers and trading firms had anticipated this tight-
Bright stock fob domestic NWE 890.00 930.00 nc
ness and an expected rise in prices, and sought to prepare
SN 150 fob European export 710.00 750.00 +10.00
accordingly. Moves to build more stocks have in turn added
to the firmer demand and drop in spot availability. SN 500 fob European export 770.00 810.00 +10.00
Producers had struggled to respond to rising crude and Bright stock fob European export 825.00 865.00 +5.00
vacuum gasoil (VGO) prices during the third and fourth

Group II €/t $/t
quarters of last year because of weaker demand and surplus
supplies. Some buyers and trading firms had even sought to
resist any price increases this month. But with those fun- N100 fca ARA 672.00 704.00 -15.50 840.00 880.00 nc
damentals now reversing, producers have more leverage to N150 fca ARA 676.00 708.00 -15.50 845.00 885.00 nc
adjust their prices accordingly. N220 fca ARA 688.00 720.00 -15.50 860.00 900.00 nc
Any such price adjustment would follow a slump in base
N600 fca ARA 764.00 796.00 -17.50 955.00 995.00 nc
oil values versus VGO to their lowest level in a year. These
have fallen by some $170/t since second-half July amid a
sustained rise in outright VGO prices during that time. Group III €/t $/t
Buyers rely on term contracts 4cst fca NWE 795.00 840.00 nc 993.00 1,049.00 +21.50
While buyers were anticipating such price adjustments, they 6cst fca NWE 825.00 865.00 nc 1,031.00 1,081.00 +22.50
were less concerned about supply tightness. Many of them
8cst fca NWE 790.00 835.00 nc 987.00 1,043.00 +21.50
have covered their forecast requirements with term con-
tracts that were negotiated in the third quarter of last year. Turkey Group I $/t
This move to increase their contracted volumes followed a Low High ±
period of extreme supply tightness during the first half of
SN 150 cfr Gebze 695.00 735.00 +5.00
last year because of a heavy round of plant maintenance.
SN 500 cfr Gebze 775.00 815.00 +5.00
This strategy has cut blenders’ reliance on the spot
market. But it has also cut the monthly availability of spot
Crude $/bl
supplies.
±
Demand for the heavier grades continued to outpace
North Sea Dated 70.52 +1.18
buying interest in SN 150. But even the market for those
supplies is now more balanced. Discounts to published prices SN 500 premium to North Sea Dated 40.82 +0.23
had been available at the beginning of the month. But those

Oil products
discounts have now been removed.
±
While demand rises, supply is tightening. Several Euro-
pean Group I producers are starting or preparing for planned Heating oil 0.1% barge ($/t) 616.00 +15.25
and unplanned shutdowns for maintenance. Vacuum gasoil 0.5% barge ($/t) 528.50 +7.37
A Mediterranean refinery is expected to shut down next Vacuum gasoil 2.0% barge ($/t) 512.63 +7.38
week for two-months’ maintenance work. The timing would
Fuel oil 3.5% barge ($/t) 369.00 +1.75
partly overlap with the shutdown of another refinery in the
Straight run M-100 fuel oil cargo ($/t) 386.50 +1.75
same region starting in April. Major producers in Israel and
Turkey also have maintenance during this period. Oil products premiums
The producers are starting to build inventories ahead Heating oil premium to crude ($/bl) 12.24 +0.87
of the shutdowns. The move is cutting spot supplies to the Heating oil premium to VGO 2.0% ($/bl) 7.53 +0.97
open market. Buyers in those regions are expected to seek SN 500 premium to heating oil ($/bl) 28.59 -0.64
volumes from Europe to cover any spot requirements.
SN 500 premium to VGO 2.0% ($/bl) 36.11 +0.33
The expected restart of a re-refinery has been delayed.
It halted operations following a fire in the second half of last

Europe
year. It had targeted a resumption of production in January. European forward prices $/t
SN 150 SN 500
But extensive repair work means the producer is now holding
Low High +/- Low High ±
off giving any indication of the start-up date.
Availability of supplies in the Baltic market remains suf- Feb 2018 720.00 740.00 +10.00 780.00 800.00 +10.00
Mar 2018 719.60 739.60 +10.40 779.60 799.60 +10.40
ficient for now. But buyers there have been competing for Apr 2018 716.45 736.45 +10.75 776.45 796.45 +10.75
volumes and building inventory ahead of an expected rise in 2Q 2018 713.15 733.15 +9.95 773.15 793.15 +9.95
prices and tighter supplies caused by upcoming maintenance 3Q 2018 705.50 725.50 +9.55 765.50 785.50 +9.55
The price shows the implied forward-curve base oil price required to maintain
work in Russia.
its existing profit margin relative to Ice gasoil futures.
Refer to www.argusmedia.com for methodology
Currency volatility impacts Group II
Supply and demand in the Group II market remains balanced. European forward premium to gasoil $/t
Buyers purchasing imported volumes at prices linked to SN 150 SN 500
Group I base oils are benefitting from the strengthening euro Midpoint ± Midpoint ±
currency versus the US dollar. Feb 2018 119.85 +2.85 179.85 +2.85
Supplies of approved and unapproved grades are avail- Mar 2018 120.30 +2.45 180.30 +2.45
Apr 2018 123.45 +2.15 183.45 +2.15
able on a spot basis. But there is limited interest from
2Q 2018 126.75 +2.90 186.75 +2.90
European importers in export volumes of unapproved grades 3Q 2018 134.45 +3.30 194.45 +3.30
available on a spot basis from the US. The premium shows the implied forward-curve profitability of fob Europe SN 150
and SN 500 relative to Ice gasoil futures.
New production capacity is expected to start imminently
in the Mideast Gulf. These supplies are targeted at regional
and nearby markets such as India rather than Europe. But an Vessel enquiries: Europe t
increase in shipments to those markets could force current Loading port Next port B/L Date Volume
suppliers to those markets to target other outlets instead. Temryuk Gebze 10-20 Feb Up to 4,000
Sitra Mumbai/ARA Prompt Up to 5,000
Group III holds firm West Med Caribs Prompt 3,000
Baltic ARA/N.France 04-05 Feb Up to 6,000
Group III base oil prices face sustained upward pressure.
Fawley Vado 28-30 Jan 6,300
But the fundamentals driving the approved and unapproved Leixoes Hamriyah 1H Feb Up to 3,000
markets continue to diverge. Rdm+Fawley Derince 30 Jan-01 Feb 3,150
The market for approved base oils is growing increas- Fawley Rdm+Sweden 27-29 Jan 2,200
USGC WAF 1H Feb Up to 11,000
ingly tight ahead of planned maintenance in Asia-Pacific
Rotterdam Houston Feb 5,000
that is expected to begin in March. Approved producers are Source: shipping agents, brokers
beginning to restrict volumes to term customers in order to
ensure that they can cover all contractual demand. Produc- volumes, but availability is more limited. Some producers
ers are targeting a rise in prices for these grades in line with are holding back volumes ahead of the peak-demand season
demand. or planned maintenance work.
By contrast, there is steady spot availability of unap- Discounts on export cargoes are no longer available. Such
proved grades from the Mideast Gulf and Russia. But even prices had been widespread as recently as the beginning of
these prices are getting strong support from the overflow of this month. Some producers have told customers that they
demand from the market for approved supplies. The tight- will not have spot availability until mid-February or March.
ness of approved supplies has given buyers additional incen- Even then they are unsure about the volume available.
tives to consider ways to facilitate the use of both approved Demand in some overseas markets is beginning to wane
and unapproved volumes at their blending plants. The price following an influx of European exports at the end of Decem-
incentive also remains significant. The price spread between ber and the beginning of January. A large volume of these
approved and unapproved supplies remains steady at $150- supplies were targeting India and the UAE, where require-
200/t depending on the supplier, grade and volume. ments are now covered. At the same time, rising European
prices are making less feasible the arbitrage to many mar-
Export supplies tighten kets.
Prices for export volumes of Group I supplies continue to Demand for Group I base oils from the African market
rise as availability tightens. Export volumes for January have remains strong. Russian cargoes from the Baltic market were
already been sold. Buyers are enquiring about February a key source of supplies for that market last year.

Global base oils fundamentals data
To facilitate analysis and planning
To highlight trends and opportunities
Downloadable data
• Total imports and exports
• Trade data with breakdown by individual
countries
• Base oils/lube production
• Base oils/lube consumption
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• New plants and recent expansions
Market reporting
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illuminating the markets Events
Europe
TURKEY Freight rates to Gebze, Turkey $/t

Route 3,000t 5,000t Route 3,000t 5,000t
Turkish base oil prices have risen, supported by reduced Black Sea 23-26 19-21 Antwerp 55-60 45-50
availability from the country's sole domestic producer as Augusta 35-37 27-29 Baltic 78-83 70-75
well as from the Black Sea market. But slack demand capped UAE 80-85 63-67
* provided at market close on 26 January by Borachart (www.borachart.com)
the increase.
Tupras’ base oil unit at its Izmir refinery is scheduled to is expected to be completed by the end of February at the
be taken off line from the beginning of February for six- latest.
weeks’ maintenance work. Supplies will be limited or halted While importers wait to secure their licenses, many of
during the shutdown, depending on the grade. But supplies them are already making enquiries for supplies from the
of all grades remained available for now. European and Russian markets. But stronger prices in both
The producer increased its prices last week ahead of the regions are deterring buyers.
shutdown. The further depreciation in the US dollar versus Availability of Group I supplies from the Black Sea
the Turkish lira since then has raised further these prices in remains scant. But there has been a pick-up in demand for
US dollar terms. light-grade Group III supplies as a substitute for Group I
The producer maintained its prices this week, after volumes. The price of the 4cst grade from Russia is currently
raising price levels for all grades by 71 Turkish Lira/t ($19/t) competitive in the Turkish market and can be utilised in
last week. Its price for SN 150 held at TL3,035/t. Its SN 500 many applications.
price was atTL3,105/t, and SN 100 at TL3,005/t. Its bright Turkish base oil imports $/t
stock price held at TL3,360/t. The prices do not include an
additional loading fee of TL57.33/t. 2015 2016 2017
In US dollar terms, the price for SN 150 rose by $7/t to 60
$809/t. That was its highest level in two years and increased
50
its premium to fob Black Sea prices to more than $200/t,
the widest since late 2015. The price held at a premium of
40
around $80/t to fob European prices. But offers of European
supplies at those levels were deemed to be too high to be
30
workable.
A reluctance to buy partly reflected concern about 20
lacklustre domestic demand. Many importers also continue
to wait for the renewal of their import licences. This process 10 |
Jan May Sep Dec
Turkey’s key Base oil suppliers - t

Nov 2017
Russia 3,440
Belgium 0
US 0
Poland 0
Netherlands 0
Germany 3
Hungary 0 Ukraine 0
Uzbekistan 889
France 252
Serbia 0 Turkmeninstan 0
Spain 0
Italy 3,600
Greece 10,039 Iran 0

Morocco 0
Brazil 0
India 0

Russia and FSU
Base oil prices in the Baltic market have risen, supported by Baltic Sea Group I $/t
Low High ±
strong demand, higher price offers and tightening supplies.
Prices in the Black Sea market got support from limited SN 150 fob 620.00 660.00 +10.00
availability and an open arbitrage to markets such as the SN 500 fob 710.00 750.00 +10.00
Mideast Gulf and India. Prices in the Naushki market rose as

Black Sea Group I $/t
Chinese buyers raised their bids for light grades especially.
Low High ±
Trading activity is reviving in the Baltic region. Supplies
at regional terminals are plentiful. But there has been a SN 150 fob 580.00 630.00 +10.00
SN 500 fob 640.00 690.00 +10.00
marked pick-up in shipments from these ports amid strong
buying interest from Europe, the Mideast Gulf and west Af-
Naushki Group I $/t
rica. Stocks remain ample, but regional buyers have sought
Low High ±
even more supplies in anticipation of strong demand and a
marked slowdown in availability over the coming months. SN 150 cpt 480.00 520.00 +35.00
SN 500 cpt 550.00 590.00 nc
Like last year, these Baltic supplies are already fast be-
coming some of the only spot volumes available. Spot supply
Russian base oils, lubes rail/river exports ‘000t
in Europe has tightened as several producers in that market
Dec Nov ± Dec Nov ±
begin plant shutdowns or build stocks in preparation for such
Rail
maintenance work.
Overland 37.08 29.42 +7.66 Baltic 56.67 39.82 +16.85
Afganistan 0.05 0.13 -0.08 Kaliningrad 20.13 18.79 +1.34
Baltic exports rise Armenia 0.00 0.00 nc Liepaja 5.94 1.83 +4.11
Strong demand has supported a rebound in cargo loadings Azerbaijan 0.40 0.35 +0.05 Riga 29.09 17.62 +11.47
from Baltic ports. These have risen to more than 44,000t Belarus 3.27 1.88 +1.39 Ventspils 1.29 1.23 +0.06
so far this month. That compared with less than 51,000t China 5.62 4.02 +1.60 St.Petersburg 0.22 0.35 -0.13
in November and December combined. More cargoes are Hungary 0.00 0.00 nc
North Korea 0.00 0.00 nc Black Sea 22.31 3.88 +18.43
scheduled for loading in the coming days.
Finland 1.10 1.00 +0.10 Taganrog 18.61 3.01 +15.60
A 15,000-16,000t cargo was loaded on the vessel Aquar-
Kazakhstan 1.81 3.34 -1.53 Yeisk 1.97 0.00 +1.97
ius at the Latvian port of Liepaja and at Svetly terminal in Kyrgyzstan 0.95 0.96 -0.01 Kavkaz 1.16 0.69 +0.48
Kaliningrad earlier this week. The vessel was bound for the Latvia 3.98 2.17 +1.81 Novorossiysk 0.57 0.18 +0.39
Mideast Gulf. Lithuania 0.44 0.93 -0.49 Reny 0.00 0.00 nc
A 4,000t cargo was being loaded this week on the vessel Moldova 0.18 0.00 +0.18 Odessa 0.00 0.00 nc
Mongolia 0.10 0.46 -0.36 Azov 0.00 0.00 nc
Blue Emerald at the Latvian port of Liepaja. The vessel will
Romania 3.52 0.78 +2.74
likely pick up some extra volumes at another European port
Poland 1.44 0.85 +0.60 River
before heading for Africa. Georgia 0.00 0.36 -0.36 Volgograd 0.00 8.84 -8.84
The vessel Nordic Saga has been lined up to load around Tajikistan 1.24 0.98 +0.26
3,000t of base oils at Riga next week. The cargo is then Turkmenistan 0.22 0.26 -0.04 Far East
scheduled to move to Dordrecht. Ukraine 11.14 10.03 +1.12 Nakhodka 4.58 5.34 -0.76
A large flow of Russian supplies to Baltic ports is helping Uzbekistan 1.61 0.92 +0.69
Total Russia rail, river exports 120.63 87.29 +33.34
to replenish stocks this month. More than 40,000t has moved
to these terminals so far in January. Just that volume alone
Russian base oil, lubes rail/river exports by supplier ‘000t
would be the second highest since September.
Dec Nov ± Dec Nov ±
Volgograd 28.67 18.66 +10.01 Yaroslavl 7.92 6.31 +1.61

Supplies set to tighten
by rail 28.67 9.82 +18.85 Ufa 6.34 3.84 +2.50
But supplies are then expected to tighten in the coming
by river 0.00 8.84 -8.84 Orgkhim 5.68 6.07 -0.39
months as Russian refiners start their seasonal round of N.Novgorod 0.00 0.00 nc Obninsk 1.28 1.17 +0.11
maintenance work. These would coincide with an expected Perm 26.09 24.33 +1.76 Sofrino 0.29 0.41 -0.12
pick-up in demand in Russia and Europe as blenders prepare Novokuibyshevsk 12.52 8.29 +4.23 Orenburg 0.00 0.00 nc
for the spring oil-change season. Angarsk 11.20 8.88 +2.32 Omsk 9.07 7.70 +1.37
Nizhnekamsk 8.60 0.00 +8.60 Other 2.97 1.63 +1.34
Total 120.63 87.29 +33.34

Russia and FSU
There are expected to be no or few shipments of Russian and Belarusian base oil export duty * $/t
Feb 2018 Jan 2018 Dec 2017 Nov 2017 Oct 2017 Sep 2017
February-loading volumes from Gazpromneft because of
scheduled repairs at the Yaroslavl refinery. The plant’s base 36.00 33.40 31.50 28.80 26.30 25.20
oil unit will be shut from early February for two-months’ Aug 2017 Jul 2017 Jun 2017 May 2017 Apr 2017 Mar 2017
maintenance work. The company plans to use volumes from 22.30 24.20 24.00 25.20 26.60 27.30
Omsk refinery to meet finished lubes demand in Russia’s * tax paid by producer for base oils export outside of Russia, Belarus, Kazakh-
domestic market. stan, Tajikistan and Kyrgyzstan
The drop in supplies follows the sale of an unusually large

volume of base oils from the producer in recent months.
Naftan base oil offers and trades, 19-25 Jan *
Rosneft’s Novokuibyshevsk plant is expected to shut for Volume offered Price, fca Price, fca Volume sold
Grade
scheduled maintenance work in mid-March. It is expected to (t) (€/t) ($/t) (t)
resume operations in late April. SN 150 660 483 600 660
Rosneft last week offered up to 28,100t of February- SN 500 1,000 560 695 1,000
loading supplies from the Yaroslavl, Novokuibyshevsk and SN 1,200 1,000 591 734 1,000
Ufa refineries. But the volume offered from the Yaroslavl 4cst 120 516 641 60
* for imports into EU, Turkey, USA import tax of 3.7% will be charged
refinery already dropped to just 400t ahead of maintenance
— BNTD, traders
work at the plant.
There was strong demand for these shipments from
Baltic importers seeking to replenish stocks ahead of the
Baltic loadings t
expected slowdown in supplies. Bids for light-grade products
Port/terminal Vessel Next port Volume B/L Date
were at around $580-590/t cpt Posin, mid-viscosity grades at
$650-670/t and SN 900 at around $720/t cpt. The producer is Liepaja+Svetly Aquarius UAE 16,000 24 Jan
set to announce the tender results next week. Svetly Northsea Beta Antwerp 4,000 17 Jan
Liepaja+Riga Smeraldo Hull 5,300 13-14 Jan
Svetly Astina Rotterdam 7,500 9 Jan
Naftan price offers rise
Svetly Key Marin Rotterdam 3,200 4 Jan
Belorussian Oil started offering February-loading volumes
Riga Manas India 3,300 4 Jan
from Naftan’s Belarus refinery. The supplies included around
Riga Besiktas Galata Dordrecht 3,300 3 Jan
700t of SN 150, 1,000t of SN 500 and 1,000t of SN 1200.
Riga Straitview Morocco 2,000 2 Jan
The supplier initially maintained its price offer in euros
Svetly Fidelio Rotterdam 5,600 22 Dec
for SN 150 and SN 1200 at €483/t ($600/t) and €591/t
Svetly Straitview Dordrecht 9,000 19 Dec
($734/t) fca refinery respectively. But these prices were
Riga Ganges Star Hull 6,500 14 Dec
some $9-11/t higher in US dollar terms because of the
Svetly Astral Rotterdam 9,000 10 Dec
sustained depreciation of the currency versus the euro. The
Svetly Manas Rotterdam 6,300 26 Nov
company cut the price for SN 500 by €11/t to €560/t ($695/t)
Riga Cape Esmeralda WAF 4,000 25 Nov
fca refinery. All the supplies were sold out at these levels.
Svetly Mainland Rotterdam 6,100 21 Nov
Belorussian Oil then on 25 January offered an extra 500t
Riga Asc Gothenburg 4,000 8 Nov
each of these grades. It also raised their prices sharply. It
Liepaja Heinrich UK 5,300 28 Oct
offered SN 150 at €545/t ($677/t), SN 500 at €589/t ($731/t) Svetly Granato Antwerp 4,800 24 Oct
and SN 1200 at €603/t ($749/t) fca refinery. The seller also Liepaja Ardea Rotterdam 1,800 3 Oct
offered 1,500t of SN 650 at €593/t ($736/t) fca refinery. Its Riga Havstraum Hull 6,000 3 Oct
exports typically do not include that grade. But no deals
were done at these higher levels.
February-loading Group III supplies from Tatneft’s Nizh-
nekamsk refinery have already sold out. Prices were some
Vessel enquiries: FSU t
$30/t higher than for January. Buyers were seeking an even
larger volume of supplies for March.
Prices in the Black Sea market have got support from Baltic ARA/N.France 04-05 Feb Up to 6,000
Riga USGC Jan Up to 7,000
tight spot availability. Most such volumes were tied to term
contracts. The limited availability has curbed opportunities

Russia and FSU

Russian domestic base oil supplies ‘000t
to work the wide open arbitrage to markets like Mideast
Supplier Dec 17 ± Nov 17
Gulf. Instead supplies are moving to that region from the
Baltic market. Lukoil Volgograd 9.30 1.17
Rosneft Novokuibyshevsk 14.94 -2.24
Turkish buyers continued to seek supplies of Russian ori-
Bashneft Ufa 8.79 -0.60
gin. But they have been advised to expect no spot volumes
Lukoil Perm 10.23 2.77
for this year. There have been some moves by other sellers Rosneft Angarsk 11.04 -0.17
to transport supplies from the Baltic region down to Black Gazpromneft Omsk 11.10 3.16
Sea terminals, before offering the volumes into Turkey. Gazpromneft/Rosneft Yaroslavl 8.30 -1.16
Orgkhim 3.29 -0.02
Tatneft Nizhnekamsk 4.13 3.67
Chinese buyers raise bids
Rosa-1 0.06 -0.06
Prices rose in the cpt Naushki market, supported by strong
Lukoil Tyumen 0.56 -0.12
demand from Chinese buyers for supplies from Rosneft’s Shaumyan lube plant 0.42 0.42
Angarsk refinery. The refiner last week offered up to 5,500t Devon Group 0.00 0.00
of February-loading base oils from the plant. The volume in- Sofrino lube plant 0.02 -0.01
cluded up to 1,100t each of SN 150, SN 250, SN 450, SN 1200 Rosneft Ryazan 0.29 0.11
and bright stock. Experimental plant Neftekhim 0.06 -0.06
Obninskorgsintez 0.01 -0.06
China’s importers have had to raise their bid levels for
Others 42.95 0.00
these products amid strong competition from Baltic com-
TOTAL 126.87 8.19
panies. Bids for light-grade products were at around $500-
520/t cpt Naushki. Targeted levels for medium-neutrals were
around $550-590/t cpt. The producer is set to announce the
tender results next week.
The Argus Russian diesel index inched lower to 42,488
roubles/t ($753/t). Prices were pressured by a slowdown in
fuel demand in Russia’s domestic market.
FSU key producers’ SN 500 price (netback) * $/t
Perm $/t
Kara Sea
Norway
Barents Sea
To Baltic Sea 615
Ye
nis
ei
To Black Sea 570

SWEDEN
To Naushki 440
White Sea
Ob
Omsk $/t
Se
Ufa $/t
On
ve
To Baltic Sea 593
ega
rn
ay
To Baltic Sea 611
Ye
a
n
Dv
ise
FINLAND in
To Black Sea 555
i
RUSSIA
Refinery To Black Sea 579
Helsinki
City/town To Naushki 467
Tallinn
St Petersburg
Port
Ob
To Naushki 442
ESTO N I A
Perm
ara
Yaroslavl a Ang
m
Ka
ol
L AT V I A
b
To
Riga Nizhny
Liepaja Novopolotsk Novgorod
Oka
Lithuania Moscow
Omsk
Vilnius
Angarsk $/t
Yen
Kaliningrad
Minsk
Ufa
Volgograd $/t
Dnepr
im
is
BELARUS
Ish
ei
Warsaw
Novokuibyshevsk
To Baltic Sea 618 Lake
To Baltic Sea 542
Astana Baikal
Irty
POLAND Orsk
To Black Sea 507
Ural
To Black Sea 607

s
Don
h
Kiev Sakhalin
a
ur
Am
Volg
UKRAINE K A Z A K H S TA N Island
Kremenchug
Dnestr Dn
ep
Volgograd
To Naushki 409 To Naushki 514
r
MO
LD
HUNGARY Nikolaev MONGOLIA

OV
Odessa Azov
A
ROMANIA Sea
CROATIA Reni Kavkaz Caspian Aral
Constanta Feodosiya Novorossiysk Sea Sea
BOSNIA Danube
Black Sea Bishkek
SERBIA
GE OR GIA UZBEKISTAN
BULGARIA
Tbilisi KYRGYZSTAN
MACEDONIA A ZE R B A IJA N
ALBANIA ARMENIA Turkmenbashi Tashkent Fergana n
TURKEY Baku pa
Ankara Yerevan T U R K M E N I S TA N Ja
GREECE of
Dushanbe a
Ashkhabad TAJIKISTAN Se
J A PA N
SYRIA CHINA
Tehran
Mediterranean Sea IRAQ
A F G H A N I S TA N
* price calculated by subtracting transport
Baghdad costs and
I R A Ntaxes between the producer and the fob Baltic, fob Black Sea and cpt Naushki pricing point.
PA K I S TA N
L I B YA EGYPT SAUDI
ARABIA INDIA

US
US base oils prices are firm, supported by balanced supplies Argus USGC domestic prices
and higher feedstocks and competing fuels prices. $/USG $/t
Crude prices have continued to increase this week, Low High ± Low High ±
reaching their highest levels since December 2014. The Group I

increasingly higher feedstock prices continue to provide SN 150 2.22 2.38 +0.02 673.00 721.00 +6.00
upwards price pressure for base oils. SN 500 2.54 2.70 nc 757.00 805.00 nc
Bright stock 3.17 3.33 nc 932.00 979.00 nc
Several more Group II+ and Group III producers have
Group II
raised their posted prices this week. These followed a round
N100 2.19 2.35 +0.02 679.00 729.00 +6.50
of Group II and Group I posting increases earlier this month. N220 2.24 2.40 +0.02 683.00 732.00 +6.00
Motiva first raised its Group III 4cst and 6cst prices by N600 2.57 2.73 +0.02 771.00 819.00 +6.00
$0.10/USG with effect from 5 January. This lifted Motiva’s Group III
postings for 4cst to $3.03/USG and 6cst to $2.98/USG. Exx- 4cst 2.90 3.06 +0.04 914.00 964.00 +13.00
6cst 2.91 3.07 +0.04 917.00 967.00 +13.00
onMobil then began to notify its customers on 8 January of
8cst 3.05 3.22 +0.04 961.00 1,014.00 +14.00
a $0.22/USG increase to its Group II mid-viscosity and Group
Volume: 50t minimum
II+ light-viscosity prices with effect from 26 January.
Group III postings rise Argus USGC Group I bulk export prices
$/USG $/t
Phillips 66 and Petro-Canada this week raised their Group
II+ and Group III posted prices by $0.22-0.24/USG. Avista Oil
also increased its Group III 4cst posted price by $0.22/USG SN 150 fob 2.18 2.34 +0.02 661.00 709.00 +6.50
SN 500 fob 2.54 2.70 +0.03 757.00 805.00 +9.00
with effect from 29 January. More Group III suppliers are
Bright stock fob 2.77 2.93 nc 814.00 861.00 nc
likely to raise their prices in the coming weeks. Volume: 1,000t minimum
Several of the Group I posted price increases announced
in recent weeks went into effect this week. The price Argus USGC Group II bulk export prices
increases that have taken effect are reflected in the Argus $/USG $/t
Americas Posted Price table. Low High ± Low High ±
Several more major and independent lubricant blenders N100 fob 2.15 2.31 +0.02 667.00 716.00 +6.50
have announced price increases for their finished products. N220 fob 2.20 2.36 +0.02 671.00 720.00 +6.00
This latest round of lubricant price increases comes shortly N600 fob 2.54 2.70 +0.03 762.00 810.00 +9.00
after the rise in Group II and Group I base oils postings. The Volume: 1,000t minimum
lubricant price increases reflect the impact of higher prices

Argus USGC naphthenic domestic prices
for base oils and additives as well as increased transporta-
$/USG $/t
tion costs.
Pale oil 60 2.63 2.79 nc 779.00 827.00 nc

Demand rises ahead of price increase
Pale oil 100 2.71 2.87 nc 794.00 841.00 nc
Domestic blenders have seen a pick-up in orders for finished
Pale oil 500 2.65 2.81 nc 761.00 807.00 nc
products as customers seek to secure supplies before the Pale oil 2000 2.80 2.96 nc 799.00 844.00 nc
price increases take effect next month. The stronger-than- Volume: 20t minimum
usual domestic demand for base oils and increased orders
for finished products has signalled a possible earlier start to Argus USGC naphthenic bulk export prices
the spring buying season. $/USG $/t
But some blenders have sought to secure more supplies Low High ± Low High ±
in January in an effort to get ahead of any further price Pale oil 60 fob 2.26 2.42 +0.02 670.00 717.00 +6.00
increases. Pale oil 100 fob 2.30 2.46 +0.02 674.00 721.00 +6.00
Pale oil 500 fob 2.27 2.43 +0.02 652.00 698.00 +6.00
Group II prices have held firm as surplus supplies contin-
Pale oil 2000 fob 2.31 2.47 +0.01 659.00 705.00 +3.00
ue to be cleared in the domestic and export spot market.
Volume: 1,000t minimum

US
A few Group II producers have prompt supplies available Pemex Salamanca prices
on a spot basis. These supplies are available at higher levels MXN/t * $/t $/USG
Price ± Price ± Price ±
following the recent round of posted price increases. Spot
export offers have similarly increased by $0.10-0.16/USG in Group I
SN 100 15,418.63 nc 834.16 +8.07 2.71 +0.03
recent weeks.
SN 150 15,911.87 nc 860.85 +8.33 2.80 +0.02
SN 250 14,408.90 nc 779.53 +7.54 2.56 +0.02
Higher prices complicate arbitrage deals SN 500 18,766.15 nc 1,015.26 +9.81 3.36 +0.03
There is firm overseas demand for Group II supplies from the SN 650 21,532.19 nc 1,164.91 +11.27 3.91 +0.04
Bright stock 24,961.14 nc 1,350.42 +13.06 4.55 +0.05
US. But prices for these supplies are now too high to close * prices in Mexican peso/t effective from 01 Jan
deals to markets such as India.
Feedstocks
A few more shipments of Group II supplies from the US
$/USG $/bl
have been lined up to move to India. Most of these supplies Price ± Price ±
were secured last month or earlier this month.
Nymex WTI crude front month 1.56 +0.04 65.51 +1.56
A major US Gulf coast refinery has spot cargo volumes Argus Sour Crude Index (ASCI™) 1.54 nc 64.64 -0.16
of its N220 and N600 available for export in February. USGC low sulphur VGO 0.5% cargo 1.93 +0.03 81.26 +1.31
Another major Group II producer also has cargo volumes of USGC high sulphur VGO 2% cargo 1.90 +0.03 79.76 +1.31
its mid- and heavy-viscosity supplies available for February. Feedstocks premiums
These excess supplies have been offered into the Indian and $/USG $/bl
Mideast Gulf markets. Price ± Price ±
A major US Gulf coast producer has sold most of its SN 500 premium to WTI 1.06 -0.01 44.56 -0.30
surplus Group II supplies through February. Most of these SN 500 premium to ASCI™ 1.08 +0.03 45.43 +1.42
supplies have moved to India. A smaller volume of surplus SN 500 premium to VGO 2% 0.72 nc 30.31 -0.05
supplies has moved to Latin America. Oil products
Several vessel enquiries have surfaced to move supplies $/USG $/bl
of various Group II base oils from the US Gulf coast to India Price ± Price ±
and the Mideast Gulf in February. The volumes ranged from NYH heating oil barge 2.01 +0.04 84.33 +1.73
5,000t to 15,000t. USGC 10ppm diesel 62 cargo 2.07 +0.07 87.06 +3.17
Oil products premiums

Limited supplies support Group I $/USG $/bl
Group I prices are firm amid limited supplies. A major Group Price ± Price ±
I producer that has had large surplus volumes of its heavy Heating oil premium to WTI 0.45 +0.01 18.82 +0.17
grades has moved to clear these supplies in the export Heating oil premium to VGO 2% 0.11 +0.01 4.57 +0.42
market. SN 500 premium to heating oil 0.61 -0.01 25.74 -0.46
A major producer will begin a planned turnaround from US SN 500 forward prices $/USG $/t
mid-February. The planned work is expected to last be- Low High ± Low High ±
tween six and seven weeks and will involve the refinery’s Feb 2018 2.60 2.65 +0.03 773.30 788.20 +8.95
sole crude unit. The producer has built up sufficient invento- Mar 2018 2.58 2.63 +0.03 770.05 784.95 +9.35
Apr 2018 2.56 2.61 +0.03 763.95 778.85 +9.60
ries ahead of the turnaround.
2Q 2018 2.55 2.60 +0.03 759.50 774.40 +9.65
Some suppliers continue to look for a large volume of 3Q 2018 2.53 2.58 +0.04 752.75 767.65 +9.70
Group I supplies to be shipped to the Caribbean over the The price shows the implied forward-curve base oil price required to maintain
its existing profit margin relative to Nymex heating oil futures.
next few months. The search for these supplies has extend- Refer to www.argusmedia.com for methodology
ed into the European market. US SN 500 forward premium to heating oil
A couple of vessel enquiries have surfaced to move $/USG $/t
excess supplies from northwest Europe and the Baltic region Midpoint ± Midpoint ±
to the US Gulf coast. One of these was for a vessel to move Feb 2018 0.55 +0.01 163.75 +1.95
Mar 2018 0.56 nc 167.05 +1.55
5,000t of base oils from northwest Europe to the US Gulf
Apr 2018 0.58 nc 173.15 +1.25
coast in February. Another vessel enquiry was seen to move 2Q 2018 0.60 +0.01 178.80 +3.00
up to 7,000t of base oils from the Baltic region to the US 3Q 2018 0.62 nc 184.75 nc
The premium shows the implied forward-curve profitability of fob US export SN
Gulf coast in January. 500 relative to Nymex heating oil futures.

US
Fire prompts brief shutdown Naphthenic base oils

A couple of refineries have had small fires in the last week.
A refinery that produces premium-grade light- and mid-vis- US naphthenic base oils prices have held firm amid a round
cosity grades and Group I heavy grades had a boiler fire on of producer price increases, balanced supplies and higher
17 January. The refinery was shut for three days. crude prices.
Another major US Gulf coast refinery had a small fire on A naphthenic refinery started last week a month-long
22 January. It remains unclear what units were involved and planned turnaround. The refinery will not produce any naph-
what, if any damage, occurred. thenic base oils during the maintenance shutdown.
Group III prices have continued to increase amid bal- Another naphthenic refinery will begin a planned turn-
anced supplies amid a heavy round of refinery maintenance. around this weekend. This maintenance is expected to last
A round of Group III refinery maintenance in Asia-Pacific between two and three weeks. The producer is not likely to
and the Mideast Gulf in the first few months of the year have any spot supplies available until late February.
will curb production at these plants. Some producers have Another naphthenic refinery will have a planned turn-
sufficient supplies in storage tanks in the US to cover their around later in the first quarter. This maintenance is planned
commitments in the region. to last four to six weeks.
More unapproved Group III supplies will arrive in the US Some buyers have been unable to secure additional
in late February. These supplies will come from the Mideast prompt supplies amid the round of refinery maintenance.
Gulf. Those producers that have had surplus naphthenics
continue to clear their supplies into the export market. A
large volume of heavy viscosity pale oils has been lined up
Vessel enquiries: Americas t
to move to west Africa in the first half of February.
The pale 60 premium to four week-average WTI crude
USGC WCI 1H Feb Up to 15,000
prices slid to $50.53/bl, holding at its lowest levels since
USGC WCI 2H Feb Up to 10,000
early March 2017.
USGC WAF 1H Feb Up to 11,000
Riga USGC Jan Up to 7,000
Rotterdam Houston Feb 5,000
West Med Caribs Prompt 3,000
Argus spot US SN 150 vs posted prices $/USG US domestic N600 vs posted prices $/USG
US SN 150 ExxonMobil HollyFrontier US N600 Phillips 66 Chevron Motiva FHR

Paulsboro
3.50
3.40
3.00 3.20
3.00
2.50
2.80
2.00
2.60
1.50 2.40
3 Feb 17 2 Jun 17 29 Sep 17 26 Jan 18 3 Feb 17 2 Jun 17 29 Sep 17 26 Jan 18
Vessel fixtures: Americas

Vessel Loading port Next port B/L Date Volume, t Freight, $/t
Chembulk Savannah USGC Le Havre Ely Jan 3,300 ---

RHL Augsburg MED ECSA 11-14 Jan 4,600 ---
TBD USGC ECSA 25-31 Jan 8,150 ---

AMERICAS Posted Prices $/USG
Group I *
ExxonMobil Gulf coast HollyFrontier Paulsboro Refining east coast Calumet Shreveport
Effective $/USG ± Effective $/USG ± Effective $/USG ± Effective $/USG ±
70/75 26 Jan 18 3.13 +0.15

100 26 Jan 18 3.19 +0.15 26 Jan 18 3.13 +0.15 25 Oct 17 3.29 +0.12
150 26 Jan 18 3.24 +0.15 26 Jan 18 3.31 +0.15 25 Oct 17 3.24 +0.12
250 26 Jan 18 3.22 +0.15
300/350 26 Jan 18 3.11 +0.15
500 26 Jan 18 4.07 +0.15 25 Oct 17 3.78 +0.12
600/650 26 Jan 18 3.79 +0.15 19 Jan 18 4.10 +0.15
700 25 Oct 17 3.81 +0.12
Bright stock 01 May 17 4.61 +0.15 24 Apr 17 4.69 +0.20 04 May 17 4.76 +0.15 27 Apr 17 4.79 +0.15
Group II *
Phillips 66 Gulf coast Chevron Gulf coast Motiva Gulf coast FHR Gulf coast
70 12 Jan 18 2.95 +0.13 12 Jan 18 2.80 +0.13

75/80 12 Jan 18 2.95 +0.13 12 Jan 18 2.80 +0.13
100/120 12 Jan 18 2.90 +0.16 10 Jan 18 2.89 +0.12 05 Jan 18 2.47 +0.10 12 Jan 18 2.77 +0.16
200/220 12 Jan 18 2.98 +0.13 10 Jan 18 2.99 +0.12 05 Jan 18 2.54 +0.10 12 Jan 18 2.79 +0.13
600 12 Jan 18 3.42 +0.12 10 Jan 18 3.44 +0.12 05 Jan 18 2.84 +0.10 12 Jan 18 3.31 +0.12
Group II *
ExxonMobil Gulf coast Calumet Shreveport Petro-Canada Mississauga
Effective $/USG ± Effective $/USG ± Effective $/USG ±
70 16 Jan 18 2.84 +0.13

80 19 Jan 18 3.19 +0.15
100 19 Jan 18 3.06 +0.15 16 Jan 18 2.83 +0.16
150 19 Jan 18 3.49 +0.15
200/220 26 Jan 18 3.23 +0.22 16 Jan 18 2.88 +0.13
325 19 Jan 18 3.80 +0.15
350 16 Jan 18 3.18 +0.13
650 16 Jan 18 3.40 +0.13
Group II+ *
SK Lubricants Gulf coast Phillips 66 Gulf coast ExxonMobil Gulf coast Petro-Canada Mississauga
50/60 25 Jan 18 4.42 +0.24

65 26 Jan 18 4.58 +0.24
70/80 01 May 17 4.34 +0.20 25 Jan 18 4.43 +0.24
100 16 Jan 18 3.61 +0.22
110/130 26 Jan 18 3.61 +0.22
Group III *
SK Lubricants Gulf coast Phillips 66 Gulf coast Petro-Canada Mississauga
Effective $/USG ± Effective $/USG ± Effective $/USG ±
4cst 01 May 17 4.66 +0.20 25 Jan 18 4.66 +0.22 26 Jan 18 4.87 +0.22
6cst 01 May 17 4.66 +0.20 26 Jan 18 4.87 +0.22
8cst 01 May 17 4.74 +0.20 25 Jan 18 4.84 +0.22 26 Jan 18 4.97 +0.22
Group II+ * Avista Oil midwest/east coast *

Kleen Performance Products Effective $/USG ± Effective $/USG ±
110/130 15 Jan 18 3.81 +0.12 Group II N150 15 Jan 18 3.25 +0.13

240 15 Jan 18 3.86 +0.12 Group III 4cst 17 Apr 17 3.88 +0.20
* the ± column shows the price difference between the current and previous posted price.

AMERICAS Posted Prices $/t
Group I *
ExxonMobil Gulf coast HollyFrontier Paulsboro Refining east coast Calumet Shreveport
Effective $/t ± Effective $/t ± Effective $/t ± Effective $/t ±
70/75 26 Jan 18 970.30 +46.50

100 26 Jan 18 982.52 +46.20 26 Jan 18 964.04 +46.20 25 Oct 17 1,010.03 +36.84
150 26 Jan 18 994.68 +46.05 26 Jan 18 1,016.17 +46.05 25 Oct 17 978.48 +36.24
250 26 Jan 18 978.88 +45.60
300/350 26 Jan 18 942.33 +45.45
500 26 Jan 18 1,229.14 +45.30 25 Oct 17 1,134.00 +36.00
600/650 26 Jan 18 1,129.42 +44.70 19 Jan 18 1,221.80 +44.70
700 25 Oct 17 1,127.76 +35.52
Bright stock 01 May 17 1,369.17 +44.55 24 Apr 17 1,392.93 +59.40 04 May 17 1,408.96 +44.40 27 Apr 17 1,421.62 +44.52
Group II *
Phillips 66 Gulf coast Chevron Gulf coast Motiva Gulf coast FHR Gulf coast
70 12 Jan 18 914.50 +40.30 12 Jan 18 868.00 +40.30

75/80 12 Jan 18 902.70 +39.78 12 Jan 18 856.80 +39.78
100/120 12 Jan 18 896.82 +49.48 10 Jan 18 893.01 +37.08 05 Jan 18 765.70 +31.00 12 Jan 18 856.62 +49.48
200/220 12 Jan 18 908.16 +39.62 10 Jan 18 911.95 +36.60 05 Jan 18 774.70 +30.50 12 Jan 18 850.25 +39.62
600 12 Jan 18 1,031.13 +36.18 10 Jan 18 1,037.16 +36.18 05 Jan 18 857.68 +30.20 12 Jan 18 997.96 +36.18
Group II *
ExxonMobil Gulf coast Calumet Shreveport Petro-Canada Mississauga
Effective $/t ± Effective $/t ± Effective $/t ±
70 16 Jan 18 880.40 +40.30

80 19 Jan 18 984.43 +46.29
100 19 Jan 18 940.22 +46.09 16 Jan 18 871.24 +49.26
150 19 Jan 18 1,069.20 +45.95
200/220 26 Jan 18 985.15 +67.10 16 Jan 18 879.55 +39.70
325 19 Jan 18 1,157.75 +45.70
350 16 Jan 18 964.46 +39.43
650 16 Jan 18 1,032.41 +39.47
Group II+ *
SK Lubricants Gulf coast Phillips 66 Gulf coast ExxonMobil Gulf coast Petro-Canada Mississauga
50/60 25 Jan 18 1,425.45 +77.40

65 26 Jan 18 1,451.86 +76.08
70/80 01 May 17 1,367.10 +63.00 25 Jan 18 1,417.60 +76.80
100 16 Jan 18 1,135.31 +69.19
110/130 26 Jan 18 1,129.93 +68.86
Group III *
SK Lubricants Gulf coast Phillips 66 Gulf coast Petro-Canada Mississauga
Effective $/t ± Effective $/t ± Effective $/t ±
4cst 01 May 17 1,467.90 +63.00 25 Jan 18 1,479.55 +69.85 26 Jan 18 1,529.72 +69.11
6cst 01 May 17 1,467.90 +63.00 26 Jan 18 1,533.37 +69.27
8cst 01 May 17 1,493.10 +63.00 25 Jan 18 1,514.92 +68.86 26 Jan 18 1,550.09 +68.61
Group II+ * Avista Oil midwest/east coast *

Kleen Performance Products Effective $/t ± Effective $/t ±
110/130 15 Jan 18 1,187.58 +37.40 Group II N150 15 Jan 18 1,011.34 +40.45

240 15 Jan 18 1,196.21 +37.19 Group III 4cst 17 Apr 17 1,220.14 +62.89
* 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.

Market News and Analysis
South Korea’s December base oil exports fall The slowdown contrasted with a surge in base oil exports
South Korea's base oil exports fell in December amid a drop to southeast Asia to 817,110t in 2017. The volume was up by
in shipments to southeast Asia and Europe. But supplies to more than 100,000t from the previous year, making the re-
key markets such as China and the US held relatively firm. gion the third-largest outlet for South Korean supplies after
Exports came to 366,550t in December, according to China and India.
trade promotion organization Kita. The volume was down by But base oil exports to the region fell in December amid
13pc from the previous month. The slowdown left shipments a seasonal slowdown in demand. Buyers were also seeking
of 1.05mn t in the fourth quarter down sharply from 1.21mn more light-grade base oils. But availability of that product
the previous quarter and at the lowest quarterly level in a remained tight. Exports of 54,010t were down by 36pc from
year. November and the second-lowest in 17 months.
But total exports of 4.54mn t in 2017 were still 9pc Base oil exports to India edged down to a five-month
higher than the previous year. low of 70,270t in December. But they still remained at much
The drop in exports in December followed the month- firmer levels than during the first half of the year. Strong
long shutdown of a major Group II base oil unit in the coun- demand and high prices for light-grade base oils especially
try, which ended in the first half of December. Extreme port incentivised South Korean producers to boost their ship-
congestion also delayed shipments and deterred some sellers ments to that market. These rose to 485,450t in the second
from offering more supplies. Many producers also had limit- half of the year, up from 380,840t during the first half.
ed surplus volumes to sell at year-end. Their low inventories More South Korean supplies also moved to the Mideast
followed unusually strong demand in the preceding months Gulf, where the expected availability of new base oil sup-
from within the region, as well as from more distant markets plies was delayed until early this year.
such as the Mideast Gulf, Europe and Latin America. Shipments to Saudi Arabia rose to 3,830t in December.
Firmer Chinese demand extended into December. Sup- The volume was the highest since early 2014. But shipments
plies were tighter because of several plant shutdowns in that to the UAE fell back to 6,440t in December, down by more
country that extended well into December. The country's than 10,000t from the previous month. The slowdown added
domestic prices also held firm after surging the previous to that market's tight availability of Group II supplies.
month following a jump in diesel prices. Base oil exports to the US held steady in December at
South Korean base oil exports to China came to 83,180t 57,820t. Monthly exports to that market have hovered close
in December. The volume was down from an eight-month to that level throughout the year. Total exports of 693,720t
high of 94,000t in the previous month. But total exports of to the US in 2017 rose by 12pc from the previous year to a
177,180t in the last two months of the year were just 2,800t record high. The rise in exports helped to cover for a sharp
lower than year-earlier levels, when Chinese buyers had drop in premium-grade supplies to the US from Qatar last
begun replenishing stocks much earlier than usual. year.
Base oil exports of 988,250t to China in 2017 fell by 2pc South Korean shipments to the Netherlands and Belgium
from the previous year. The contraction was the first in five combined fell to 10,640t in December. The volume fell from
years and coincided with the start-up of more base oil pro- 37,330t a month earlier to the second-lowest level in 21
duction capacity in the Chinese market. months. But base oil exports of 296,250t to those two mar-
kets in 2017 still rose by more than 80,000t from the previ-
South Korean base oil imports and exports ’000 t
ous year to the highest level since 2014. That was the year
when a new Group III plant started production in the region.
Exports Imports Net imports
600 South Korea's base oil imports were steady in December
500
at 35,970t. A rise in supplies from Japan countered a drop in
shipments from Indonesia and Singapore.
400
Imports from Japan rose in December to an 18-month
300
high of 14,780t. The higher volume coincided with the com-
200 pletion of an unusually heavy round of plant maintenances in
100 Japan in the first 11 months of the year.
0 While supplies from Japan recovered, South Korea's base
-100 oil imports from Singapore fell in December to a 10-month
low of 2,960t. Even so, total imports of 38,660t in 2017 were
-200
up threefold from 12,880t the previous year.
Dec 16 Apr 17 Aug 17 Dec 17

Mexico’s November base oil output, imports slip New car sales fell by 4.9pc in December to 1.09mn,
Mexico's base oil production and imports fell in November, according to the European Automobile Manufacturers As-
coinciding with a slowdown in the country's lube demand. sociation. The drop in sales was the first for the month of
Base oils output fell to 2,457 b/d (10,380t) in November. December in four years. The month had one less working
The volume was down from a seven-month high of 3,007 day than in December 2016. Some markets are also facing
b/d in the previous month and 22pc lower than in the same uncertainty about changes in government legislation involv-
month the previous year. Total output of 680,439 bl in the ing diesel cars.
first 11 months of the year was 31pc down from the same German demand for new cars fell by 1pc in December to
period a year earlier. 253,950, mostly because of fewer working days that month
A sustained surge in imports more than covered for the compared with a year earlier. But incoming orders for new
drop in supplies from Mexico's sole base oils unit at Pemex's cars continued to rise strongly. The contraction contrasted
245,000 b/d Salamanca refinery. But even those shipments with 9.4pc growth in November and 2.7pc growth to 3.44mn
edged down in November as supplies from the US remained in 2017.
lower than usual. Italian new car sales fell in December for the first time in
Mexico's total base oil imports of 73,320 kilolitres eight months, dipping by 3.2pc to 121,100. Even so, sales of
(64,900t) in November were down from 76,310kl in the previ- 1.97mn in 2017 rose strongly by 7.9pc from the previous year
ous month and the second-lowest since June. Supplies of to the highest level since 2009. A 23pc surge in car sales to
69,200kl from the US remained below the 70,000 kl/month companies and rental firms last year outweighed a 1.8pc
level for a second month. They had averaged more than drop in sales to private customers.
80,000 kl/month in the third quarter of the year. Diesel cars accounted for 56.7pc of total sales in 2017,
The slowdown followed storm-related disruptions to US down from a 57.4pc share the previous year. Hybrid cars ac-
Gulf coast base oil production from late August through to counted for a 3.4pc share of the total, up from 2.1pc in 2016.
the end of the year. The subsequent drop in production UK new car registrations fell in December for a 10th time
capacity during that period curbed the size of US refiners' in 11 months amid a sustained slump in demand for diesel-
typical overhang of surplus volumes at the end of the year. powered cars. Sales fell by 14.4pc in December to 152,470.
But the drop in supplies was relative. Imports from The contraction outpaced the 5.7pc fall in sales to 2.54mn in
the US were lower, but they remained well above typical 2017. The year-on-year fall in sales was the first in six years.
volumes before early 2016, when Mexico began allowing fuel Among car segments, only sports utility vehicles posted year-
imports. A large portion of the base oil imports are blended on-year growth.
with diesel as a fuel extender. Demand for diesel-powered cars fell by 31.1pc in Decem-
Mexico's base oil imports got some support in October ber and 17.1pc in 2017. The slowdown slashed their share of
from a rise in shipments from markets such as Curacao and total car sales to 42pc last year, down from a 47.7pc share in
South Korea. But supplies from those sources fell back in 2016.
November. Europe ⁄ China ⁄ US car sale growth %
The exception was Russia. Imports from that market rose
to 2,220kl in November. The volume was up from 1,220kl in Europe China US
the previous month and the highest since early 2011. Before 40
October, there had been no supplies from that market since
the beginning of 2013. 30
20
Europe’s December car sales fall
Europe's new car sales fell in December for the first time
10
in three months, squeezed by a drop in demand in four of
Europe's five primary markets. 0
New car sales for 2017 rose for a fourth straight year, in-
creasing by 3.4pc to 15.14mn. But the growth rate fell below -10
the 4pc level for the first time since 2013. Jun 16 Dec 16 Jun 17 Dec 17

"Confusing anti-diesel messages have caused many to Brazil’s November base oil /lube output falls
hesitate before buying a new low emission diesel car," said Brazil's base oil and lube output fell in November to a four-
Society of Motor Manufacturers and Traders chief executive month low, curbing the impact of a rise in the country's
Mike Hawes. imports of the lubricant feedstock.
"2017 has undoubtedly been a very volatile year and the The instability of base oil output led to a cut in produc-
lacklustre economic growth means that we expect a further tion in the first 11 months of the year to the lowest level in
weakening in the market for 2018," he said. at least 17 years. The fall in output was compounded by a
The contraction far outweighed the 2.7pc rise in sales drop in the country's base oil imports during that period,
of gasoline-powered cars in 2017, and the 34.8pc surge in leaving net supplies at their lowest level since 2009. The
demand for alternatively fuelled vehicles (AFV). That rise slowdown has coincided with a gradual recovery in the coun-
in AFV sales pushed up their market share to 4.7pc in 2017, try's lube demand.
from a 3.3pc share the previous year. Base oil and lube output fell to 277,330 bl in November,
The Spanish market broke the downward trend as new according to ANP. The volume was down from 365,800 bl
car sales rose for a 21st straight month. Sales climbed by the previous month and the lowest since August. Output of
6.2pc to 102,943. Sales to private customers rose by 7.4pc, 3.39mn bl in the first 11 months of the year was 4.3pc lower
outpacing the 4.2pc rise in sales to companies and 6.2pc rise than year-earlier levels.
in demand from rental firms. A pick-up in imports partially countered the impact of
Sales of 1.23mn in 2017 rose 7.7pc from the previous year lower domestic production amid a revival in supplies from
to their highest level since 2007. the US. But the size of the typical rebound in imports in the
Russian automobile sales extended their strong re- second half of the year lagged far behind year-earlier levels.
bound, rising 14pc in December to 166,010, according to the Base oil imports of 34,890t in November were up from
automobile manufacturers committee of the association of 23,560t in the previous month and the highest since July.
European businesses. Even so, total imports of 170,690t in the five months to
The recovery in demand since March has boosted sales November were down from 207,530t during the same period
for 2017 by 12pc to 1.60mn. The annual increase in sales was a year earlier.
the first since 2012. The more muted rise in imports in the second half of the
"The market has a long way to go return to its former year mostly reflected a drop in supplies from the US. These
strength," said Joerg Schreiber, chairman of the AEB Auto- recovered to 20,490t in November, up from 15,840t the
mobile Manufacturers Committee. "But a first and important previous month.
step in the right direction has been made." Supplies held in a similar narrow range in August and
September. The steady imports contrasted with a surge in
Alternative vehicle market share rises US supplies during the same period last year. The lower
European demand for alternative vehicles (AVs), which volumes this year followed the widespread storm-related dis-
includes electric cars and hybrids, surged by 55pc to 55,813 ruption to US base oil production from late-August. Refiners
in the third quarter. The sales accounted for 1.6pc of total in that market then prioritised domestic buyers as output
registrations during the period. recovered during the fourth quarter of the year. The effect
But the growth in the total number of AVs continued to was to slash the volume of US base oils for export at a time
lag the rise in overall demand for new cars. The trend is of year when that market typically faced a surplus of such
likely to limit for now any impact on base oil requirements supplies.
for engine oils. There was a pick-up in Brazil's base oil imports of
The Spanish AV market grew at the fastest rate in the premium-grade supplies from other markets. But these were
third quarter, increasing by 209pc to 2,116. But its share insufficient to cover for the smaller-than-usual volume of
of the total car market lagged other major markets with a shipments from the US.
0.7pc share. Imports of premium-grade supplies from South Korea
German AV sales grew by 119pc to 14,458 in the third rose in November to a six-month high of 5,200t. Supplies
quarter. Sales accounted for 1.7pc of the total market share from Malaysia climbed to a three-month high of 4,340t.
during that period. French AV registrations rose by 47pc to Imports of Group I supplies from Europe also rose to a
8,117. These accounted for 1.5pc of total market sales. one-year high of 1,410t. But the volume was still small, high-
lighting the sustained slide in demand for these supplies.

MaIntenance and shutdowns
Upcoming / recent base oil plant maintenance / shutdowns / closures

Refiner Location Timing Capacity Capacity affected Cause
SK-Repsol Cartagena, Spain Ely-Sep 2018 for 1 month 630,000 t/yr All Maintenance
CNOOC Huizhou, China Sep 2018 for 45 days 400,000 t/yr All Maintenance
SK-Pertamina Dumai, Indonesia Sep 2018 for 20 days 505,000 t/yr All Maintenance
Hyundai-Shell Daesan, South Korea Aug 2018 650,000 t/yr All Maintenance
Formosa Mailiao, Taiwan Jul/Aug 2018 for 45 days 600,000 t/yr All Maintenance
Galp Porto, Portugal Ely-May to Mid-Jun 2018 150,000 t/yr All Maintenance
Rosneft Novokuibyshevsk, Russia Mid-Mar 2018 for 30-40 days 350,000 t/yr All Maintenance #
SK-JX Nippon Ulsan, South Korea Mid-Mar 2018 for 1 month 1,300,000 t/yr NA Maintenance
Petronas Melaka, Malaysia 1H Mar 2018 for 30 days 300,000 t/yr All Maintenance #
Sinopec Gaoqiao, China Ely-Mar 2018 for 2 months 620,000 t/yr All Maintenance
S-Oil Onsan, South Korea 01 Mar 2018 for 3 weeks 41,000 b/d Partial, Group III Maintenance
Imperial Oil Strathcona, Alberta, Canada End-Feb 2018 2,400 b/d All Closure
Holly Frontier Tulsa, Oklahoma, US 20 Feb 2018 for 6-7 weeks 9,500 b/d Partial CDU maintenance
Rosneft/Gazpromneft Yaroslavl, Russia 01 Feb 2018 for 2 months 350,000 t/yr All Maintenance #
Tupras Izmir, Turkey 01 Feb to Mid-Mar 2018 300,000 t/yr All Maintenance
Repsol Puertollano, Spain End-Jan 2018 for 2 months 105,000 t/yr All Maintenance #
Bazan Group Haifa, Israel 22 Jan 2018 for 1 month 75,000 t/yr All Maintenance #
San Joaquin Refining Bakerfield, California, US 26 Jan 2018 for 3 weeks 8,100 b/d NA Maintenance
Panjin Northern Liaoning, China 21 Jan 2018 for 1 month 400,000 t/yr All Feedstock shortage
Bapco/Neste Bahrain 2H Jan 2018 for 2-3 weeks 400,000 t/yr Partial Maintenance
LyondellBasell Houston, Texas, US Mid-Jan 2018 for 30 days 4,600 b/d NA Maintenance #
Calumet Princeton, Louisiana, US 1Q 2018 for 4-6 weeks 6,900 b/d NA Maintenance
Sinopec Jingmen, China 2H Dec 2017 for 2 months 200,000 t/yr All, Group I Maintenance
Avista Oil Peachtree, Georgia, US 02 Dec 2017 for 4-5 days 1,600 b/d All Maintenance
Zibo-Xintai Shandong, China From Nov 2017 200,000 t/yr 100,000 t/yr Run-cut
Formosa Mailiao, Taiwan Nov to 23 Dec 2017 600,000 t/yr Partial Refinery maintenance
HPCL Mumbai, India 22 Nov to Ely Dec 2017 480,000 t/yr Partial, Group I Maintenance
GS Caltex Yeosu, South Korea 1H Nov 2017 for 1 month 23,000 b/d NA Maintenance
CNOOC Taizhou, China 1H Nov to 2H Dec 2017 600,000 t/yr All Maintenance
Hainan Handi Hainan, China Nov 2017 to Ely Jan 2018 300,000 t/yr All Maintenance
HCC Indianapolis, Indiana, US 31 Oct 2017 for 3-4 days 2,500 b/d All Maintenance
Pertamina Cilacap, Indonesia 22 Oct to 20 Nov 2017 440,000 t/yr Partial Maintenance
Calumet Shreveport, Louisiana, US Mid-Oct to 02 Nov 2017 8,000 b/d Partial Maintenance
Holly Frontier Tulsa, Oklahoma, US 1H Oct 2017 for 2 weeks 9,500 b/d All Maintenance
YPF La Plata, Argentina Ely-Oct to Mid-Dec 2017 4,700 b/d All Maintenance
Chevron Pascagoula, Mississippi, US 07 Oct 2017 for 2 weeks 23,000 b/d All Hurricane contingency
Valero Three Rivers, Texas, US 03 Oct 2017 for 1 month 2,400 b/d All Maintenance
EGPC Alexandria, Egypt 01 Oct 2017 for 1 year 115,000 t/yr All Maintenance
Gazpromneft Omsk, Russia Oct to Nov 2017 230,000 t/yr Partial CDU maintenance
Tatneft Nizhnekamsk, Russia End-Sep to End-Nov 2017 186,000 t/yr All Technical issues
JX Nippon Mizushima A, Japan Mid-Sep to Mid-Nov 2017 180,000 t/yr All Maintenance
ENI Livorno, Italy 12 Sep to 2H Oct 2017 645,000 t/yr All Flood repairs
Avista Oil Peachtree, Georgia, US 05 Sep 2017 for 5-6 days 1,600 b/d All Maintenance
LyondellBasell Houston, Texas, US 29 Aug to Mid-Oct 2017 4,600 b/d All Feedstock shortage
Motiva Port Arthur, Texas, US 29 Aug to 04 Oct 2017 40,000 b/d All Flood repairs
ExxonMobil Baytown, Texas, US 27 Aug to 25 Sep 2017 28,000 b/d All Flood repairs
Sepahan Isfahan, Iran 2H Aug to 2H Oct 2017 485,000 t/yr Partial Maintenance
Naftan Novopolotsk, Belarus Ely-Aug to End-Sep 2017 200,000 t/yr Partial Maintenance
Every effort has been made to verify information directly with appropriate company sources. Some information has been obtained from usually reliable sources, but
cannot be officially confirmed with the refinery concerned. The list will be updated when new information becomes available. #Additional/updated plant data over the
past week

Market fundamentals
Oct 2017 Industrial overview Lube/base oils overview

Automobile Industrial
sales growth Production Sales Import Export
’000 Mom% Yoy% Yoy% ’000t Mom% Yoy% ’000t Mom% Yoy% ’000t Mom% Yoy% ’000t Mom% Yoy%
China 2,352 +0 +0 +6.20 † 170.0 -21 -8 3.0 -25 +200

Japan* 372 -25 -2 +5.90 185.6 +24 +18 105.4 -7 +0 6.0 -64 -69 68.0 +98 +31
Europe 1,170 -18 +6 +4.20
US* 1,355 -11 -1 +0.90 797.2 +32 +11 540.8 +19 -5 153.5 -4 -5 428.2 +11 +17
France 176 +3 +14 +5.70 48.4 +0 -4

Germany 273 -5 +4 +2.50 25.3 -29 -44 88.1 +13 +4 51.5 -10 -18 22.0 -2 -4
Italy 158 -5 +7 +3.10 37.0 +9 +9
Russia 149 +0 +17 71.8 -11 -10
Spain 95 +14 +14 +4.20 35.9 -2 +0
Turkey 92 +29 +11 +7.40 16.0 +0 +60 37.0† -23 -8 21.0 -34 -30 0.0 +0 +0
UK 158 -63 -12 +3.90 59.9 +81 +100 35.0 -16 -11
Australia* 96 -4 +3 0.0 +0 +0 25.6 +6 -4 34.4 -24 +34 28.7 +120 +54

India 185 -12 -5 +2.20
Singapore +14.50 23.3‡ -42 -25 238.3‡ -6 +12
South Korea -2.40 26.0 -40 +4 266.0 -45 -21
Taiwan* 36 +13 -1 +2.85 99.1^ +10 -5 49.8 +98 +35 8.0 +14 +100 46.0 -33 -48
Thailand* -0.30 †
Argentina* 12.4 +5 +20 0.0 -34 -30 0.0 +0 -100

Brazil* 203 +2 +28 +5.30 51.5 +3 +9 57.0† -32 -53 36.4 -10 -54 30.9 +426 +432
Mexico* -1.10 13.1 +181 +3
* The conversion factor used is 159 litres to a barrel and 7.1 barrels to a metric tonne. † Apparent demand. ‡ 4 weeks to end-month.
^ Taiwan lube production plus imports
Global industrial growthYoy % Global lubricating oils demand ’000 t
US China Europe US Germany Brazil

10 700
8 600
500
6
400
4
300
2
200
0 100
-2 0
Apr 16 Oct 16 Apr 17 Oct 17 Apr 16 Oct 16 Apr 17 Oct 17
Sources: Country data for base oil and lube sales, production, imports and exports taken from national sources
US: Energy Information Administration. Japan: Petroleum Association of Japan. Italy: Unione Petrolifera. Singapore: International Enterprise. Country data for
industrial production growth taken from national sources. Automobile sales data taken from national automobile associations. US: Autodata Corp. Russia: Association
of European Businesses in the Russian Federation. Australia: Federal Chamber of Automotive Industries. India: Society of Indian Automobile Manufacturers. Thailand:
Toyota Motor Thailand.

Market fundamentals
Upcoming / recent expansions / conversions / new plants

Refiner Location Timing New capacity Grade Expansion / New
Modrica refinery Modrica, Bosnia NA 200,000 t/yr Group III Expansion

Sasol Louisiana, US After 2020 NA GTL Cancelled
HILL Chimkent, Kazakhstan 2020 250,000 t/yr Group I/II/III New
Lub-rref Bangladesh Ltd Chittagong, Bangladesh Q1 2019 50,000 t/yr Group II N70, N150, N500/600 re-refinery New
ExxonMobil Singapore 2019 NA Group II Expansion
VN Oil Hiep Phuoc, Vietnam After 2018 50,000 t/yr Group II re-refinery New
Hainan Handi Hainan, China 2H 2018 1mn t/yr Group II+/III New
Hengli Petrochemical Dalian, China Q4 2018 600,000t/yr Group II and III New
Pemex Salamanca, Mexico 2018 3,300 b/d Group II Delayed
ExxonMobil Rotterdam, Netherlands 2018 NA Group II New
Holly Frontier Wood Cross, US 2018 10,000-12,000 b/d Group III Delayed
Luberef Yanbu, Saudi Arabia 4Q 2017 715,000 t/yr Group II New
Panjin Northern Asphalt Liaoning, China 2H Nov 2017 300,000 t/yr Naphthenic base oils New
Neste NA By 2017 200,000 t/yr Group III Expansion
Slavneft Yaroslavl, Russia 2Q 2017 100,000 t/yr Group III New
Petrobras Comperj, Brazil 2017 355,000 t/yr Group II Cancelled
S-Oil Onsan, South Korea Dec 2016 200,000 t/yr Grp II N500 Conversion
CNOOC Taizhou, China Oct 2016 600,000 t/yr Group II New
Ergon Refining Vicksburg, US 3Q 2016 3,000 b/d Group I bright stock New
Shandong Qingyuan Shandong,China Jun 2016 600,000 t/yr Group II New
Sinopec Maoming, China Jun 2016 400,000 t/yr Group II+, Group III Expansion
Adnoc Abu Dhabi, UAE Apr 2016 620,000 t/yr 500,000 t/yr Group III, 120,000 t/yr Group II New
Jinling Petrochemical Nanjing, China Mar 2016 200,000 t/yr Group II New
ExxonMobil Singapore 1Q 2015 300,000 t/yr Group II Expansion
ExxonMobil Baytown, US 1Q 2015 300,000 t/yr Group II Expansion
NIS, Serbia Serbia 2015 180,000 t/yr Group II/naphthenic Cancelled
Nynas Harburg, Germany 2015 NA 350,000 t/yr naphthenic base oils Conversion/expan-
Sinopec Yanshan, China 2015 240,000 t/yr Group II Expansion
Tatneft Nizhnekamsk, Russia Dec 2014 186,000t /yr Group II/III New
SK Lubricants/Repsol Cartagena, Spain 20 Sep 2014 630,000 t/yr Group III 3-8cst New
Shell/Hyundai Oilbank Daesan, South Korea Aug-Sep 2014 650,000 t/yr Group II New
Hengrunde Petrochemical Shandong,China Aug 2014 200,000 t/yr Group II New
Chevron Pascagoula, US July-Aug 2014 1.25mn t/yr Group II New
Heritage-Crystal Clean Indiana, US Mid-2014 25mn USG/yr Re-refined Group II light and mid-grade Expansion
Naftan Novopolotsk, Belarus May 2014 72,000 t/yr Group I Conversion
Southern Oil Queensland, Australia Mar 2014 100mn l/yr NA New
Shandong Qingyuan Shandong, China Early 2014 300,000 t/yr Group I+ New
Puralube Troeglitz, Germany 2014 50,000 t/yr Group II New
FCC Environmental Baltimore, US 2014 2,000 b/d Group II re-refinery New
Hebei Feitian Petrochemical Hebei, China Q4 2013 100,000 t/yr Group II New
Panjin Northern Asphalt Liaoning, China Oct 2013 400,000 t/yr Group II Expansion
S-Oil Onsan, South Korea Oct 2013 3,000 b/d Group III Expansion
SK Lubricants Ulsan, South Korea Jun 2013 11,000 b/d Group II heavy-grade, from Group III Conversion
Avista Oil (US) Peachtree, Georgia, US May 2013 1,000 b/d Group II New
Lwart Lencois Paulista, Brazil Jan 2013 150,000 t/yr Group II re-refinery New
Sinopec Jinan, China 4Q 2012 50,000 t/yr Group II and BS, from 100,000 t/yr Group I Conversion/expan-
Naftan Novopolotsk, Belarus Nov 2012 NA Add 6,000 t/month Group III Conversion
Lotos Gdansk, Poland 2H 2012 NA Add Group II Conversion
Every effort has been made to verify information directly with appropriate company sources. The list will be updated when new information becomes available.
#Additional/updated plant data over the past week

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illuminating the markets

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Argus Base Oils

Base oil market prices, news and analysis

Issue 18-04 | Friday 26 January 2018

Asia-Pacific $/t Europe $/t

Group I Russia and FSU $/t

Copyright © 2018 Argus Media group

Argus Market Map

fob Baltic Sea

cfr UAE (LVI)

Freight rates (US) * $/t Arbitrage opportunities - Group I $/t

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805.00 970.00 1,005.00 845.00 955.00

Feb 2018 199.85 +12.85

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Different markets seek different products Vessel enquiries: Asia-Pacific t

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tightened late last year because of several plant shutdowns

and added to market availability. Some of those shipments

Demand remains muted 8cst cfr 785.00 835.00 +5.00

The muted buying interest contrasted with the wave of

Group II market. Low High ± Low High ±

Expectations of the tighter enforcement of consumption Group I, SN 150

were some Yn250/t higher in Beijing, where supplies were East

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Tight supplies support bright stock China import price calculator *

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Buyers wary of higher crude

more than expected to their highest level in more than Group I

Light-grade availability stays tight Bright stock 81.05 nc 1,418.00 +9.00

N500 66.95 nc 1,228.00 +9.00

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vacuum gasoil (VGO) prices during the third and fourth

had been available at the beginning of the month. But those

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TURKEY Freight rates to Gebze, Turkey $/t

Turkey’s key Base oil suppliers - t

Greece 10,039 Iran 0

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Russia and FSU

Mideast Gulf and India. Prices in the Naushki market rose as

Volgograd 28.67 18.66 +10.01 Yaroslavl 7.92 6.31 +1.61

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Russia and FSU

The drop in supplies follows the sale of an unusually large

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Russia and FSU

FSU key producers’ SN 500 price (netback) *  $/t

To Black Sea 570

To Black Sea 607

HUNGARY Nikolaev MONGOLIA

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reaching their highest levels since December 2014. The Group I

lubricant price increases reflect the impact of higher prices

Pale oil 60 2.63 2.79 nc 779.00 827.00 nc

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Oil products premiums

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Fire prompts brief shutdown Naphthenic base oils

US SN 150 ExxonMobil HollyFrontier US N600 Phillips 66 Chevron Motiva FHR

Turkey’s key Base oil suppliers - t

FSU key producers’ SN 500 price (netback) * $/t

AMERICAS Posted Prices $/USG

AMERICAS Posted Prices $/t

Global industrial growthYoy % Global lubricating oils demand ’000 t