Europe’s July exports to Russia stay low

Europe’s base oils exports to Russia rose in July to a five-month high as shipments from Germany and Finland edged higher.

The increase was relative. Exports were still the fifth lowest in more than six years. The lowest volumes during that time had been during the four months before July.

Exports of 6,960t in July rose from 5,400t the previous month, government data showed. The pace of the fall in shipments from year-earlier levels was also the slowest in five months.

The 71pc drop in exports was still unusually steep.

Total exports of around 22,200t in the five months to July compared with typical shipments of close to 21,000 t/month in the year to February.

The slump in flows left total exports of 63,900t in the first seven months of the year down from more than 152,000t during the same period a year earlier.

Supplies from Finland and Germany had accounted for more than 60pc of those year-earlier volumes, or more than 92,000t of the total.

Their share of exports held above 60pc of the total in the first seven months of this year. But the total volume of less than 43,000t was more than 50pc lower than year-earlier levels.

Finland and Germany are key sources of non-Group I base oils.

Russia is a key producer and exporter of Group I base oils. Its import requirements are for other products like premium-grade and naphthenic base oils.

The limited room for interchangeability of Group I grades with other grades left Europe with tighter supplies of Group I base oils following the slowdown in shipments from Russia.

The slump in shipments from Europe to Russia similarly tightened that country’s supply of non-Group I grades.

At the same time, lube specification requirements limited the room to redirect the surplus volumes back into their own markets.

European Group I prices surged in the first five months of this year partly because of concern about tighter availability.

European Group III prices rose less steeply during the same period partly because supply was less tight.