Argus BaseOils

Argus Base Oils
Base oil market prices, news and analysis

Global trade fows, freight rates, feedstock fundamentals 2-3
Markets 4-21
News and analysis 22-24
Maintenace and market fundamentals 25-27
CONTENTS
Asia-Pacifc $/t
Group I Low High
SN 150 ex-tank Singapore 1,040.00 1,075.00 -2.50
Bright stock ex-tank Singapore 1,225.00 1,265.00 +0.00
SN 150 fob Asia 945.00 975.00 -2.50
SN 500 fob Asia 1,040.00 1,070.00 -2.50
Bright stock fob Asia 1,140.00 1,170.00 -2.50
Group II
N150 ex-tank Singapore 1,065.00 1,095.00 -5.00
N150 fob Asia 985.00 1,025.00 -5.00
N500 fob Asia 1,090.00 1,135.00 -2.50
Northeast Asia $/t
Group I Low High
SN 150 cfr 985.00 1,020.00 -2.50
SN 500 cfr 1,100.00 1,140.00 -5.00
Bright stock cfr 1,200.00 1,230.00 -5.00
Group II
N150 cfr 1,035.00 1,060.00 -2.50
N500 cfr 1,150.00 1,190.00 -5.00
India and UAE $/t
Group I Low High
SN 150 (LVI) cfr India 955.00 970.00 -7.50
SN 500 (LVI) cfr India 965.00 995.00 -7.50
Bright stock cfr India 1,195.00 1,220.00 -5.00
SN 150 (LVI) cfr UAE 935.00 950.00 -5.00
SN 500 (LVI) cfr UAE 955.00 970.00 -5.00
Group II
N150 cfr India 1,010.00 1,050.00 -5.00
N500 cfr India 1,135.00 1,170.00 -2.50
Europe $/t
Group I Low High
SN 150 fob domestic NWE 1,040.00 1,070.00 -2.50
Bright stock fob domestic NWE 1,205.00 1,250.00 -2.50
SN 150 fob European export 950.00 975.00 -5.00
SN 500 fob European export 1,000.00 1,020.00 -5.00
Bright stock fob European export 1,140.00 1,165.00 -5.00
Group II
N150 fca ARA 1,075.00 1,115.00 +0.00
N600 fca ARA 1,125.00 1,160.00 +0.00
Group III
4cst fca NWE 1,294.00 1,356.00 -1.00
6cst fca NWE 1,301.00 1,363.00 -1.00
8cst fca NWE 1,287.00 1,349.00 -1.00
Russia and FSU $/t
Group I Low High
SN 150 fob Baltic Sea 890.00 910.00 -2.50
SN 500 fob Baltic Sea 930.00 950.00 -12.50
SN 150 fob Black Sea 900.00 915.00 -2.50
SN 500 fob Black Sea 875.00 915.00 -7.50
US $/t
Group I Low High
SN 150 fob 921.00 970.00 -3.00
SN 500 fob 1,028.00 1,070.00 -6.00
Bright stock fob 1,103.00 1,126.00 -12.00
Group II
N100 fob 902.00 952.00 -3.00
N220 fob 939.00 988.00 -3.00
N600 fob 1,170.00 1,218.00 -15.00
Group III (domestic)
4cst 1,383.00 1,433.00 -3.00
6cst 1,411.00 1,462.00 -6.50
8cst 1,411.00 1,462.00 -6.50
Naphthenic base oils
Pale oil 60 fob 1,087.00 1,132.00 -4.50
Pale oil 100 fob 1,029.00 1,076.00 -3.00
Pale oil 500 fob 1,003.00 1,046.00 -4.50
Pale oil 2000 fob 1,010.00 1,056.00 -2.50
Global base oil prices have extended their fall. Demand
has weakened as buyers work down stocks before the
end of the year. Sellers in Asia-Pacifc and US are offering
supplies at lower levels in response. But the year-end price
drop is slower than in recent years, refecting support
from markets like Turkey and China. Sellers have also been
exporting supplies on a regular basis, limiting the surplus
they need to clear.
Crude oil and gasoil futures

Ice Brent front month ($/bl) 108.84 +1.85
Ice gasoil front month ($/t) 932.50 +21.00
OVERVIEW
PRICES AT A GLANCE
Copyright 2013 Argus Media Ltd
Issue 13-44 Friday 01 November 2013
Page 2 of 28
Argus Base Oils Issue 13-44 Friday 01 November 2013
fob US export
SN 150 945.50
SN 500 1,049.00
N100 927.00
N600 1,194.00
fob European export
SN 150 962.50
SN 500 1,010.00
N150 fca ARA 1,095.00
N600 fca ARA 1,142.50
cfr UAE (LVI)
SN 150 942.50
SN 500 962.50
fob Black Sea
SN 150 907.50
SN 500 895.00
fob Baltic Sea
SN 150 900.00
SN 500 940.00
cfr NE Asia
SN 150 1,002.50
SN 500 1,120.00
N150 1,047.50
N500 1,170.00
fob Asia
SN 150 960.00
SN 500 1,055.00
N150 1,005.00
N500 1,112.50
cfr India
SN 150 (LVI) 962.50
SN 500 (LVI) 980.00
N150 1,030.00
N500 1,152.50
ARGUS MARKET MAP $/t
Freight rates (US) * $/t
Route 1,000t 3,000t 5,000t 10,000t
US Gulf coast-Rotterdam 80.00 60.00 55.00 46.00
US Gulf coast-Brazil 107.00 87.00 80.00 70.00
US Gulf coast-Far East 130.00 105.00 97.00 87.00
US Gulf coast-India 125.00 105-110 97.00 90.00
* rates for September 2013, provided by SPI Marine (www.spimarineusa.com)
Freight rates (Asia-Pacifc) * $/t
Route 3,000t 5,000t
Singapore-central China 55.00 49.00
Singapore-Indonesia 33.50 30.50
Singapore-Thailand 34.50 31.50
Singapore-WC India 52.00 47.50
Singapore-Japan 64.00 58.50
Japan-central China 33.00 28.00
Mideast Gulf-WC India 41.00 32.50
Mideast Gulf-central China 71.00 65.50
South Korea-US Gulf coast 94.50 86.00
South Korea-WC India 78.00 69.50
South Korea-Singapore 34.50 30.50
South Korea-Japan 25.00 22.00
South Korea-central China 27.00 23.00
South Korea-Taiwan 28.00 23.00
South Korea-Europe 144.00 127.00
* rates based on one port loading/one port discharge
* rates provided at market close on 24 October by SPI Marine
(www.spimarineasia.com)
Arbitrage opportunities - Group I $/t
Second centre less frst
centre.
SN 150 SN 500
This week Prior week This week Prior week
Europe export-Singapore +95.00 +92.50 +135.00 +132.50
Baltic Sea-Singapore +157.50 +157.50 +205.00 +195.00
Europe export-UAE (LVI) -20.00 -20.00 -47.50 -47.50
Asia-US domestic +70.00 +74.00 +76.00 +78.00
Europe export-US domestic +67.50 +69.00 +121.00 +120.50
Black Sea-India (LVI) +55.00 +60.00 +85.00 +85.00
Asia-India (LVI) +2.50 +7.50 -75.00 -70.00
Baltic Sea-US domestic +130.00 +134.00 +191.00 +183.00
Baltic Sea-domestic NWE +155.00 +155.00 +157.50 +147.50
US export-Singapore +112.00 +111.50 +96.00 +92.50
Arbitrage opportunities - Group II $/t
Second centre less frst
centre.
N100/N150 N500/N600
This week Prior week This week Prior week
Asia-ARA +90.00 +85.00 +30.00 +27.50
Asia-US domestic +18.00 +16.00 +143.00 +154.00
Asia-India +25.00 +25.00 +40.00 +40.00
US export-ARA +168.00 +165.00 -51.50 -66.50
US export-India +103.00 +105.00 -41.50 -54.00
US export-Singapore +153.00 +155.00 -19.00 -31.50
Page 3 of 28
Global base oil prices have eased relative to competing
and feedstock fuels as outright prices fell, while diesel
values frmed relative to crude.
European domestic SN 150 base oil price premiums to
30-day average Ice gasoil have eased to around $125/t. The
premium was around $135/t for the same time last year.
Base oils premium to vacuum gasoil (VGO) slipped below
$315/t, versus more than $360/t this time last year.
US domestic N100 base oil premiums to 30-day average
heating oil fell below $0.30/USG versus $0.65/USG this
time last year. The premium over VGO fell below $0.60/
USG against $0.98/USG the same time last year.
In Asia-Pacifc, the premium of ex-tank Singapore SN
150 prices over Ice gasoil has fallen back below $130/t
compared with less than $100/t the same time last year.
Base oil prices have been easing in most markets in
recent weeks. But the pace of the fall is slower than the
same time last year. Prices then slumped as producers
sought to clear a surplus supplies.
A steady fow of exports from markets like the US
and Russia in recent months have helped to curb building
supplies in these markets. Many Asia-Pacifc refners are
still replenishing stocks or fulflling term contracts after
maintenance earlier in the year. Others have yet to resume
normal operations. European refners have some supplies
but prolonged run cuts have curbed the overhang in this
market too.
Producers typical year-end clear-out of surplus
supplies for accounting purposes is subsequently likely to
be smaller than usual. It is also earlier than usual for some
markets. A swathe of exports from the US has moved to
India in recent months, adding to already large fows from
the country this year.
Another shipment loading at the end of November is so
large it can move to India on a medium-range size vessel.
Such a large volume creates its own challenges. Indian
buyers also typically seek prices at the low end of market
levels. But with market prices already low and trading
margins tight, the cargo will beneft from lower freight
costs. It is also likely to clear out most remaining year-end
supplies from the US.
The move is only possible because of the surplus
volume available, highlighting the markets plentiful
supplies. But it also highlights the transformation of the
market in response to the rise in supplies, and the priority
on fnding an outlet for those supplies rather than holding
FEEDSTOCK FUNDAMENTALS
back to secure a higher price.
US export prices and margins are being squeezed to
clear the supplies, at levels at or below diesel values. But
the result is lower stocks.
The move and price levels contrasts with US prices
in late 2011 and 2012 suffciently high enough to attract
arbitrage shipments from Asia-Pacifc. These supplies
added to a glut that helped to trigger the US price crash
in second-half 2012. With arbitrage cargo shipments from
the US moving to Asia-Pacifc, this year is seeing a role
reversal.
cdxXLusVgoPremiumWeek2: US domestic base oils premium to VGO 2% $/USG

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0.00
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Nov 12 Feb 13 May 13 Aug 13 Nov 13
SN 150 N100
US domestic base oils premium to VGO 2% $/USG
SN 150 ex-tank Singapore premium to Ice gasoil $/t
cdxXLap150PremiumWeek: SN 150 ex-tank Singapore premium to Ice gasoil $/t

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Ice gasoil front month = 0
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Page 4 of 28
Crude $/bl

Dubai crude front month 106.62 +0.99
SN 500 premium to Dubai crude 42.07 -1.34
Oil products $/bl

Singapore 0.05% gasoil 124.10 +1.80
Gasoil premium to Dubai crude 16.70 +0.54
SN 500 premium to gasoil 24.59 -2.15
Asia SN 500 forward prices $/t
Low High
Nov 2013 1,045.00 1,065.00 -2.50
Dec 2013 1,039.95 1,059.95 -3.30
Jan 2014 1,036.50 1,056.50 -3.55
1Q 2014 1,033.35 1,053.35 -3.05
2Q 2014 1,022.60 1,042.60 -1.95
The price shows the implied forward-curve base oil price required to
maintain its existing profit margin relative to Ice gasoil futures.
Refer to www.argusmedia.com for methodology
Asia SN 500 forward premium to gasoil $/t
Midpoint
Nov 2013 124.75 -4.95
Dec 2013 129.80 -4.15
Jan 2014 133.30 -3.85
1Q 2014 136.45 -4.35
2Q 2014 147.20 -5.50
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-Pacifc base oil prices have nudged lower. Buyers
have suffcient stocks to cover requirements and are now
holding off in anticipation of lower prices.
While demand slows, buyers have received more offers
of spot supplies from southeast and northeast Asia, as well
as from markets outside the region, such as Europe and the
US.
Chinese demand has steadied. But the countrys
production has risen, curbing the market as an outlet for
surplus cargoes. Rising supplies from Taiwan to China have
added to the slowdown in demand from other sources.
But some trading frms have received more enquiries
from Chinese buyers, while South Korean producers pointed
to still frm buying interest from this market.
A sustained wave of cargoes from the US has been
fowing to India, covering many blenders light-grade
requirements in the country. The fows have dampened
demand for supplies from markets like Malaysia.
Supplies rise, outlets dwindle
The arbitrage to move Group II base oil supplies from
Asia-Pacifc to the US and Europe is shut, removing these
markets as outlets.
The limited export opportunities come as production
in northeast Asia revives after maintenance. Output is also
starting to rise as new capacity comes on line in markets
like South Korea and China.
With competition among producers rising, some of them
have started to lower their price offers.
A Thai producer sold its remaining 2,000t of October-
loading supplies at prices some $10/t lower than its earlier
offer for October supplies. It sold SN 500 at around $1,060/t
fob, with bright stock at around $1,160/t fob. It also started
offering November supplies this week, although it still has
Group I $/t
Low High
Bright stock ex-tank Singapore 1,225.00 1,265.00 +0.00
SN 150 fob Asia 945.00 975.00 -2.50
SN 500 fob Asia 1,040.00 1,070.00 -2.50
Bright stock fob Asia 1,140.00 1,170.00 -2.50
Group II $/t
Low High
N150 fob Asia 985.00 1,025.00 -5.00
N500 fob Asia 1,090.00 1,135.00 -2.50
Ex-tank Singapore reference prices $/t
Group I Group II
SN 150 SN 600 Bright stock N150 N500
1,085.00 1,235.00 1,295.00 1,125.00 1,220.00
ASIA-PACIFIC
Asia SN 500 premium to Ice gasoil $/t
cdxXLapPremiumWeek: Asia SN 500 premium to Ice gasoil $/t

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LineSet1
Page 5 of 28
ASIA-PACIFIC
no spot supplies of SN 150.
A trading frm received offers for about 5,000t of
November-loading base oils from Thai producers. Supplies
of SN 500 were offered in a $1,065-1,075/t fob range, with
bright stock in a $1,170-1,180/t fob range.
The offers follow a trend of an increasingly large volume
of exports from Thailand in recent months, with shipments
in September at their highest level in at least six years. The
rise in exports refects Thai base oils production holding at
unusually high levels in recent months. Output in September
remained high, despite earlier talk of plant run cuts.
Spot supplies were also offered from other producers
in southeast Asia, as well as from markets like Japan, and
even from Europe. But buying interest was muted, be it for
cargoes or for supplies offered in fexibags.
The arbitrage to move Group I supplies from Europe to
Singapore also looks increasingly hard to work, as the price
spread between the two markets narrows.
Taiwan is to increase substantially its exports to China
in November. The fows extend a recovery that began last
month, after the restart of Formosa Petrochemicals Group
II base oils unit in early October following a two-month
shutdown for maintenance. But the producer is unlikely to
have any spot supplies available before the end of this year.
A blender bought some more supplies of SN 500 from
a supplier in the ex-tank Singapore market. It paid around
$1,145/t ex-tank for the supplies. The price level was similar
to the price it paid about two weeks ago for the same
product.
The supplier continued to offer the product at around
$1,150/t ex-tank.
Another supplier in the ex-tank Singapore market cut its
offer for bright stock by $10/t to $1,290/t ex-tank.
It also offered Group II N150 of South Korean origin at
$1,080/t ex-tank, with N500 at $1,180/t. It offered Group III
2cst at $1,195/t, with 4cst and 6cst at $1,225/t.
But there were few enquiries at these levels. Buyers
were comfortable to maintain low inventories, or confdent
they could secure top-up supplies when required.
A Malaysian producer offered supplies of Group II+
N500 for November at $1,140/t fob Malacca. The price was
$40/t lower than its October price level. The producer was
targeting China for the supplies because of the low prices
and plentiful US supplies in the Indian market.
The producer has yet to fnd a buyer for 2,000t of Group
III 4cst and 6cst for prompt loading. It was offering Group III
supplies at around $1,060/t fob, down from around $1,090-
1,100/t in October.
Arbitrage opportunities - Group II base oils fob Asia $/t cdxXLfunArbAsia: Arbitrage opportunities - Group II base oils fob Asia $/t
hhh
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N150 vs N100 US domestic N500 vs N600 US domestic
N150 vs N150 cfr NE Asia N500 vs N500 cfr NE Asia
cdxXLapG12PremiumWeek: Fob Asia Group I vs Group II $/t

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Fob Asia Group I vs Group II $/t
South Korean base oil exports 000 t cdxXLkrExportOne: South Korean base oil imports and exports 000 t

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China Others
KITA
Page 6 of 28
China domestic prices
Yn/t $/t
Low High Low High
Group I, SN 150
Northeast
Daqing 8,500.00 8,600.00 +0.00 1,394.00 1,410.00 -2.50
Dalian 8,600.00 8,800.00 +0.00 1,410.00 1,443.00 -3.00
North
Yanshan 8,700.00 8,800.00 +0.00 1,427.00 1,443.00 -2.50
South
Maoming 8,850.00 8,950.00 +0.00 1,451.00 1,468.00 -2.50
Group I, SN 400
Northeast
Fushun 8,900.00 9,000.00 +0.00 1,459.00 1,476.00 -2.50
Dalian 9,000.00 9,100.00 +0.00 1,476.00 1,492.00 -2.50
South
Maoming 9,250.00 9,350.00 +0.00 1,517.00 1,533.00 -3.00
Group II, N150
East
Gaoqiao 9,130.00 9,230.00 +0.00 1,497.00 1,513.00 -3.00
South
Huizhou 9,160.00 9,380.00 +0.00 1,502.00 1,538.00 -3.00
China import price calculator *
Yn/t $/t
Low High Low High
Group I (imported prices)
SN 150 8,767.00 9,032.00 -5.00 1,438.00 1,481.00 -3.00
SN 500 9,637.00 9,940.00 -22.00 1,580.00 1,630.00 -6.50
Bright stock 10,394.00 10,621.00 -20.00 1,704.00 1,742.00 -6.50
Group II (imported prices)
N150 9,146.00 9,335.00 -4.00 1,500.00 1,531.00 -3.00
N500 10,015.00 10,318.00 -21.50 1,642.00 1,692.00 -6.50
* inc. 6% customs duty, 17% VAT and 1,126.00 Yuan/t consumption tax.
Northeast Asian base oil prices have nudged lower, as
buyers hold back in anticipation that rising supplies will
pressure prices further.
Lower crude prices and a cut in retail Chinese diesel
prices added to weaker sentiment. A major producer in
China this week cut its monthly internal supply price in
response to sluggish market demand.
Some buyers are also waiting for the outcome in frst-
half November of a key meeting of top Chinese government
offcials that is expected to include measures to boost
Chinas slowing economic growth.
Supplies are set to rise as a series of plants in northeast
Asia start up new capacity or resume normal operations
after prolonged maintenance. Some Chinese plants have
been focusing on meeting demand from their downstream
units or providing extra supplies to cover for shutdowns.
Some of these plants are also likely to start offering spot
supplies soon.
Prices offers of SN 150 from PetroChinas Dalian refnery
held steady at Yn8,700/t ex-refnery. It offered SN400 at
Yn8,900-8,950/t. Trading frms offered the product on an
ex-tank basis in northeast China at around Yn9,000-9,100/t
and Yn9,400/t respectively.
Price offers of SN 200 from PetroChinas Daqing refnery
held steady at Yn8,200-8,300/t ex-works, while SN400 was
at Yn8,700-8,800/t.
Spot supplies to rise
The producers Fushun refnery will possibly start offering
spot supplies of SN 200 and SN 400 in early November. It
has had no such availability for many months, because of
maintenance earlier in the year and more recently as it
covered requirements for its downstream lubricant units.
Group I $/t
Low High
SN 150 cfr 985.00 1,020.00 -2.50
SN 500 cfr 1,100.00 1,140.00 -5.00
Bright stock cfr 1,200.00 1,230.00 -5.00
Group II $/t
Low High
N150 cfr 1,035.00 1,060.00 -2.50
N500 cfr 1,150.00 1,190.00 -5.00
Group III $/t
Low High
4cst cfr 1,095.00 1,130.00 -5.00
6cst cfr 1,100.00 1,135.00 -5.00
8cst cfr 1,080.00 1,105.00 -5.00
NORTHEAST ASIA
China import prices vs domestic prices $/t
cdxXLcnPremium: China import prices vs domestic prices $/t

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SN 150 import price vs Dalian N150 import price vs Gaoqiao
Page 7 of 28
Domestic price offers for supplies of Russian origin were
mostly steady, although demand was weak. Supplies of SN
150 were offered at Yn8,550/t, or the equivalent of around
$940/t on a daf Erlian basis. Supplies of SN 250 were offered
at Yn8,650/t, SN 450 at Yn9,200/t and SN 650 at Yn9,550/t.
A large trading frm bought more than 3,000t of mostly
light-grade base oils for November from Rosnefts Angarsk
refnery in Russia. Chinese buying interest in and bid levels
for the November supplies were lower than the previous
month.
While demand for light grades has been steadier, buying
interest in heavy grades remains weak.
Supplies of SN 500 of Thai origin were offered in a
Yn9,650-9,800/t ex-tank range in east China. But the offer
attracted scarce buying interest.
Bright stock originating from PetroChinas Karamay
refnery remained plentiful, offered in a Yn10,000-10,500/t
ex-tank range in east China.
A cargo of bright stock of Taiwan origin was offered at
around $1,200/t fob. But buyers were more interested in
supplies of Thai origin.
Steady demand and relatively tight spot availability of
Group II base oils have helped to limit the downwards price
pressure of these products for now. But the gradual rise in
supplies is raising expectations that spot availability will
soon improve markedly.
Hainan Handi in south China is expected to start offering
supplies from November after a prolonged shutdown since
July. Shipments from Formosa Petrochemicals plant in
Taiwan are to rise markedly in November compared with
last month. The start-up of Panjin Northern Asphalts new
Group II unit in northeast China proceeded smoothly last
week. It plans to market its supplies throughout China
starting from early November.
CNOOC kept steady its posted prices for supplies from
its Huizhou refnery, although availability this week of its
N150 was tight.
An importer offered Group II N150 and N500 originating
from Taiwan at Yn9,300/t and Yn10,400/t ex-tank in east
China respectively. The offer was the equivalent about
$1,100/t and $1,248/t cfr respectively.
Price offers of heavy-grade supplies of South Korean
origin were in a wide Yn10,400-11,000/t range in east China.
Offers in south China were at Yn10,000/t for N150 and
Yn11,000/t for heavy grades.
A South Korean producer is still negotiating with Chinese
buyers over spot supplies for November. Price discussions
for N150 were around the $1,030/t level and around $1,140-
NORTHEAST ASIA
cdxXLkrexportcnimport: South Korean exports to China / Chinese imports 000 t
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South Korean exports to China Chinese imports
South Korean exports to China / Chinese imports 000 t
Japanese lubricating oils exports, imports 000 bl cdxXLcnImportExport: Chinese base oil imports and exports 000 t

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Aug 12 Dec 12 Apr 13 Aug 13
Exports Imports Net exports
1,150/t fob for heavy grades. The producer expected the
sales volume to remain frm. But it is likely to be lower than
in October when spot demand and sales were unexpectedly
strong. It sold 2,000t of spot supplies to Taiwan for
November. It sold 1,000t of N150 at around $1,030-$1,040/t
fob and 1,000t of heavy-grade supplies at around $1,130-
1,140/t fob.
Another South Korean producer is likely to start offering
spot supplies from next week. It is likely to offer a similar
volume to October, when it sold about 9,000t of supplies.
Supplies of Group III 4cst of Malaysian origin were
offered by a trading frm at Yn10,000/t in northeast China.
The supplies arrived several months ago.
A major producer said Group III sales were steady, even
if slow. It had no plans to cut its prices.
Wholesale domestic diesel prices in China nudged down
to Yn7,725/t in east China and Yn7,935/t in south China.
Page 8 of 28
Group I $/t
Low High
SN 150 cfr 1,005.00 1,025.00 -7.50
SN 500 cfr 1,035.00 1,050.00 -7.50
SN 150 (LVI) cfr 955.00 970.00 -7.50
SN 500 (LVI) cfr 965.00 995.00 -7.50
Bright stock cfr 1,195.00 1,220.00 -5.00
Group II $/t
Low High
N150 cfr 1,010.00 1,050.00 -5.00
N500 cfr 1,135.00 1,170.00 -2.50
Indian base oil prices have fallen, as producers
everywhere from northeast Asia to Mideast Gulf to the US
target the country with more surplus supplies.
Plant maintenance or unexpected disruptions had
curbed supplies from at least one of these sources
throughout most of this year. The disruptions had allowed
the US especially to ship an unusually large volume of base
oils to India throughout the year. The shipments include
a large 27,000t cargo to load from the US Gulf coast in
second-half November.
But production in these competing markets has now
returned to normal. While shipments from the US remain
high, they have been joined by rebounding supplies from
markets like South Korea and Bahrain.
The wave of supplies and offers has prompted buyers
to hold back. Term supplies at or above contracted volume
levels have also helped to cover more of their needs.
Many buyers have also covered their requirements
ahead of the upcoming Diwali festival and holiday on 2
November. They are likely to return to the market for
more spot supplies after the public holiday.
The US cargo, loading on the vessel Atlantic Canyon
in second-half November, is likely to be a combination of
different light-grade supplies. The volume is evenly split
between two US Gulf coast producers and was bought by
two different trading frms. One of the trading frms has
already sold about 14,000t of the supplies. Supplies of
N70 and N100 from the cargo were likely sold in a $1,005-
1,020/t range.
The shipment also includes a smaller volume of bright
stock of US origin, which has been sold at around $1,190-
1,200/t cfr India.
Domestic refnery prices
Rs/l * $/t
Group I
IOC prices, Chennai
SN 70 79.65 -0.40 1,590.00 -7.00
SN 150 75.75 -0.40 1,421.00 -7.00
SN 500 80.25 -1.80 1,481.00 -32.00
Bright stock 94.20 -1.30 1,703.00 -22.00
IOC prices, Mumbai
SN 70 77.65 -0.40 1,550.00 -7.00
SN 150 73.75 -0.40 1,384.00 -6.00
SN 500 78.25 -1.80 1,444.00 -32.00
Bright stock 93.05 -1.30 1,682.00 -22.00
Group II
IOC prices, Chennai
N70 83.11 -0.40 1,617.00 -7.00
N150 76.55 -0.40 1,469.00 -6.00
N500 81.01 -1.80 1,534.00 -33.00
IOC prices, Mumbai
N70 81.95 -0.40 1,595.00 -6.00
N150 74.55 -0.40 1,430.00 -7.00
N500 79.45 -1.80 1,505.00 -33.00
* prices in Rs/l effective from 01 Nov
Group III $/t
Low High
4cst cfr 1,060.00 1,080.00 -2.50
6cst cfr 1,050.00 1,080.00 -2.50
8cst cfr 1,045.00 1,070.00 +0.00
INDIA
Indian base oils vs Europe $/t
* India midpoint price vs Europe high price
cdxXLindiapremium: Indian base oils vs Europe $/t

0
20
40
60
80
100
SN 150 Bright stock
Page 9 of 28
The shipment, which will likely reach India in early
January, is likely to be among the last such cargoes from
the US this year, after producers in the country work down
their inventories earlier than usual before the end of the
year.
Buyers target lower prices
The shipments have curbed opportunities for suppliers
like Malaysia. The countrys spot supplies are limited.
But the price levels that Indian buyers are now targeting,
refecting similar prices paid for the US supplies, are too
low for the Malaysian producer to accept.
But shipments from South Korea have continued to
rebound, despite the infows from the US.
A producer has almost completed its spot sales for
November, with some 5,000-6,000t sold. It sold about
4,000t of N150 in a $1,030-1,060/t cfr range, with price
levels at the lower end of the range refected discounts for
larger volumes. It sold about 2,000t of heavy-grade base
oils at around $1,160-1,170/t.
Another producer expects to continue until the end
of the year to supplement term supplies of Group II
base oils with extra volumes. The supplies make up for
a drop in term shipments earlier in the year because of
maintenance. It still has no spot supplies of Group II base
oils. But it is offering a small volume of Group III 8cst base
oils. But buying interest has waned.
Shipments from Bahrain are also reviving after a pause
in August and September. A 6,000t cargo of 4cst and 8cst
base oils on the vessel Manas arrived in India during the
past week. Another cargo with as much as 8,000t was to
load from Bahrain at the end of October bound for India.
Group III base oil prices from different producers remained
in a $1,060-1,080/t range, although buyers were seeking lower
price levels. Bids were around $1,040-1,050/t cfr.
The supplies from South Korea in October include a
small volume of heavy-grade Group II base oils from a
refner that began producing the grade in June. But there
are unlikely to be any spot supplies from the producer at
least until next year.
Other heavy-grade supplies, originating from Iran,
were also offered into India, at much lower levels than the
Group II supplies. There was likely an offer of SN 500 of
Iranian origin at around $975/t cfr. The offer is some $25/t
lower than an offer and sales of Iranian SN 500 in frst-half
October at $1,000/t cfr.
INDIA
cdxXLindiaImportOne: Indian base oil imports 000 t
hhh
130
140
150
160
170
180
190
200
T
o
t
a
l
Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sep 13
0
5
10
15
20
25
I
r
a
n

a
n
d

U
A
E
Total Iran and UAE
Indian base oil imports 000 t
Port data
Offers of Iranian base oils at that price level have
closed the arbitrage for supplies from Russia, which has
already seen a sharp fall in shipments to India during the
past two months.
Pakistans NRL likely sold through a tender 2,000t of SN
65 and SN 100 for 5-7 November loading at a discount of
around $80/t to fob Asia published prices. It had offered
the supplies through a tender. The buyer was likely a UAE-
based trading frm.
Indias domestic base oil producers cut their domestic
prices for November by 0.40 rupees/l for light grades
and Rs1.80/l ($0.03/l) for heavy grades. Prices were cut
in response to weak domestic demand, falling prices for
imported cargoes and a steadier currency relative to the
US dollar.
Even with the price cut, the premium of Indian
domestic prices, in US dollar terms, over imported cargo
prices has widened to around $370/t, just $30/t lower than
a 14-month high reached at the end of September.
With the domestic price premium holding at such
a wide level, blenders and trading frms are likely to
continue to buy more of the low-priced imported cargoes.
Page 10 of 28
Mideast Gulf base oil prices remain under pressure
from a steady stream of supplies from Iran, while demand
from lube blenders holds steady.
Irans two largest producers continue to offer more
spot supplies at prices that have kept margins unusually
tight, but that were more attractive than competing
supplies from Russia.
A producer offered about 15,000t of base oils through
a tender that closes on 2 November. It is offering through
the tender SN 150, SN 500 and SN 650. Bids into the tender
are expected to be close to or below the $900/t fob level.
The producer is this week loading the last 3,000 of SN
500 and 1,200t of SN 150 that it sold in its most recent
tender in early October. It had offered around 14,000t in
that tender, selling the supplies at around $895/t fob for
the SN 150 and $925/t for the SN 500.
Another producer is offering supplies of SN 500 at
around $890-895/t fob for cash payments. But uncertainty
about the specifcations of the product has deterred some
buyers concerned that the colour may be darker than
usual.
Some of the supplies are being offered into India, with
an offer of a cargo this week at around $975/t cfr. Buying
interest in this market was weak ahead of the Diwali
festival and holiday on 2 November.
These price levels are curbing interest in Russian
supplies, which are available from the Black Sea market
at around $930/t fob and the cfr UAE equivalent of around
$1,000-1,010/t. The UAE and Indian markets have provided
attractive outlets to help soak up surplus Russian supplies
in recent months.
Prices in the ex-tank market held steady at around
$990/t ex-tank for SN 500, with around $5-10/t lower for
SN 150. Bright stock was available in a $1,320-1,360/t ex-
tank range.
Prices for supplies of on-specifcation SN 150, SN 500
and bright stock from a regional producer held steady
at $1,080/t, $1,110/t and $1,275/t respectively on a cfr
UAE or cfr India basis. But limited demand was curbing
opportunities in the spot market.
Prices of Group II base oils have held steady. Supplies
in Asia-Pacifc are rising following the completion of
prolonged shutdowns for maintenance. But producers have
yet to start offering spot supplies into the Mideast Gulf
market.
A blender received an offer for supplies of light grades
of South Korean origin at $1,060/t cfr and above $1,200/t
Group I $/t
Low High
SN 150 cfr UAE 1,010.00 1,020.00 -2.50
SN 500 cfr UAE 1,030.00 1,050.00 -2.50
SN 150 (LVI) cfr UAE 935.00 950.00 -5.00
SN 500 (LVI) cfr UAE 955.00 970.00 -5.00
Iran export prices $/t
Sepahan Oil *
SN 500 fob 940.00 -10.00
Rubber process oil fob 600.00 +0.00
Slack wax fob 800.00 +0.00
* prices on a fob Bushehr basis, effective from 25 Oct to 31 Oct
Group III $/t
Low High
4cst ex-tank UAE 1,220.00 1,245.00 -2.50
6cst ex-tank UAE 1,220.00 1,245.00 -2.50
8cst ex-tank UAE 1,220.00 1,235.00 -2.50
MIDEAST GULF
cdxXLuaeLviPremium: SN 150/SN 500 vs (LVI) SN 150/SN 500 $/t

0
50
100
150
200
SN 150 SN 500
SN 150/SN 500 vs (LVI) SN 150/SN 500 $/t
cfr for heavy grades. But supplies of both grades were also
available at around $1,150/t ex-tank.
Group III base oil prices were weaker. A cargo of Group
III 4cst of South Korean origin for November delivery
was sold by a trading frm at around $1,150-1,160/t cfr.
Spot supplies within the region are set to rise in the
coming weeks, as exports from Bahrain return to normal.
Shipments had slumped in August and September following
a plant disruption in July.
Page 11 of 28
Group I $/t
Low High
Bright stock fob domestic NWE 1,205.00 1,250.00 -2.50
SN 150 fob European export 950.00 975.00 -5.00
SN 500 fob European export 1,000.00 1,020.00 -5.00
Bright stock fob European export 1,140.00 1,165.00 -5.00
European base oil prices face sustained downwards
pressure, as blenders hold off in anticipation of a further
drop in prices, while producers maintain offer levels to
protect already-low margins.
But the relative lack of export opportunities at current
price levels, and the relatively high domestic European
prices compared with Baltic Sea prices, raises the prospect
of an additional build in supplies over the coming weeks.
The limited number of outlets has led to growing
competition to move supplies from Europe, the former
Soviet Union, and the US to markets like west Africa and
India where buyers typically target much lower prices.
Blenders are also holding off buying additional supplies,
or are negotiating hard for any such supplies, as they
start to manage their stock levels carefully for year-end
accounting purposes. They also have a widening choice of
supply options, from lower priced supplies from the Baltic
market to signs of growing supplies of premium-grade base
oils.
The fall in Baltic Sea prices since mid-August has
widened their discount to domestic European prices to
more than $150/t, its widest level since the end of last year.
Supplies of premium-grade base oils from markets like
the US and Mideast Gulf have also revived. Belgian imports
from the US rose in July to their highest level in a year. US
exports to Belgium in August rose to their highest since the
beginning of 2012.
But some more traditional buyers of Group l base oils
remain hesitant about switching to Group ll base oils until
more suppliers are available in Europe, and until the price
premium of Group II base oils over Group I narrows or
disappears.
The increasing fows from the US have coincided with
a fall in US export prices for light-grade base oils. Their
Group III /t $/t
Low High Low High
4cst fca NWE 940.00 985.00 +0.00 1,294.00 1,356.00 -1.00
6cst fca NWE 945.00 990.00 +0.00 1,301.00 1,363.00 -1.00
8cst fca NWE 935.00 980.00 +0.00 1,287.00 1,349.00 -1.00
Turkey Group I $/t
Low High
SN 150 cfr Gebze 925.00 955.00 -5.00
SN 500 cfr Gebze 925.00 955.00 -5.00
EUROPE
Oil products

Heating oil 0.1% barge ($/t) 933.00 +21.50
Vacuum gasoil 0.5% barge ($/t) 742.50 -8.38
Vacuum gasoil 1.6% barge ($/t) 726.88 -3.25
Fuel oil 3.5% barge ($/t) 579.50 +1.00
Straight run M-100 fuel oil cargo ($/t) 598.00 +1.00
Oil products premiums
Heating oil premium to crude ($/bl) 17.55 +2.06
Heating oil premium to VGO 1.6% ($/bl) 18.45 +3.37
SN 500 premium to heating oil ($/bl) 17.01 -3.59
SN 500 premium to VGO 1.6% ($/bl) 35.45 -0.23
Crude $/bl

North Sea Dated 107.79 +0.83
SN 500 premium to North Sea Dated 34.56 -1.53
cdxXLeuPremiumWeek: European SN 500 premium to Ice gasoil $/t

-50
0
50
100
150
200
LineSet1
European SN 500 premium to Ice gasoil $/t
Group II /t $/t
Low High Low High
N150 fca ARA 781.00 810.00 +1.00 1,075.00 1,115.00 +0.00
N600 fca ARA 817.00 843.00 +1.00 1,125.00 1,160.00 +0.00
Page 12 of 28
discount to domestic European SN 150 prices has widened
to more than $125/t, from around $90/t in August and less
than $50/t in May.
Producers seek to protect margins
But European base oil producers, including a major
producer, will likely aim to maintain their price offer levels
in November to support already-weak margins. Plant run
cuts and continuing maintenance has also curbed some of
the supply overhang. Exports of surplus supplies to markets
like west Africa have also cleared some of the surplus.
The pressure on base oil margins has been exacerbated
by the relative strength of European diesel prices in recent
weeks. Diesel crack spreads against crude have risen to
their highest level in seven months.
With margins under sustained pressure, some sellers are
evaluating their production plans for 2014. With supplies of
premium-grade base oils to surge next year, the pressure on
base oil margins and production will continue.
Activity in the export market is muted, with arbitrage
opportunities limited at current price levels. A trading frm
has likely won the tender to supply more than 18,000t of
base oils to Venezuelas state-owned PdV. The company was
looking to buy the supplies in two cargoes, comprising SN 85,
SN 150, SN 500 and bright stock. It requested one cargo for
delivery in early November and the second optional cargo for
delivery at the end of the month. One of the two shipments
will be supplied from the US, and the other from Europe,
because of the tight delivery time for the frst cargo.
A west Mediterranean producer was offering a 3,000t
cargo of SN 150 into Turkey within the published prices
range. But it was unable to attract any buying interest
at such levels, refecting the still-high cost of European
cargoes relative to competing supplies from markets like
Russia.
A north African producer possibly offered through a
tender about 5,000t of light- and heavy-grade base oils,
although buying interest for the supplies was muted.
Unapproved Group lll base oils continued to apply
downwards pressure on price offers for approved grades.
Their lower prices, at levels substantially lower than
published price levels, also refected competition for
market share in this segment of the market.
Producers have pointed to weak margins to support
current price levels. But margins are now at their highest
level in six months. The discount of European Group III
prices to US prices is also at its narrowest level in more
than a year.
EUROPE
European forward prices $/t
SN 150 SN 500
Low High +/- Low High
Nov 2013 952.50 972.50 -5.00 1,000.00 1,020.00 -5.00
Dec 2013 947.45 967.45 -5.80 994.95 1,014.95 -5.80
Jan 2014 944.00 964.00 -6.05 991.50 1,011.50 -6.05
1Q 2014 940.85 960.85 -5.55 988.35 1,008.35 -5.55
2Q 2014 930.10 950.10 -4.45 977.60 997.60 -4.45
maintain its existing profit margin relative to Ice gasoil futures.
European forward premium to gasoil $/t
SN 150 SN 500
Midpoint Midpoint
Nov 2013 32.25 -7.45 79.75 -7.45
Dec 2013 37.30 -6.65 84.80 -6.65
Jan 2014 40.80 -6.35 88.30 -6.35
1Q 2014 43.95 -6.85 91.45 -6.85
2Q 2014 54.70 -8.00 102.20 -8.00
The premium shows the implied forward-curve profitability of fob Europe
SN 150 and SN 500 relative to Ice gasoil futures.
cdxXLfunEuBB: European export vs Baltic/Black Sea $/t
hhh
-50
0
50
100
150
Vs SN 150 fob Baltic Sea Vs SN 500 fob Baltic Sea
Vs SN 150 fob Black Sea Vs SN 500 fob Black Sea
European export vs Baltic/Black Sea $/t
cdxXLfunEug3: European 4cst vs SN 150, vs US 4cst $/t
hhh
-300
-200
-100
0
100
200
300
400
Vs SN 150 fob domestic NWE Vs 4cst US domestic
European 4cst vs SN 150, vs US 4cst $/t
Page 13 of 28
EUROPE
Turkish base oils prices have edged lower. But buying
activity increased, amid signs of tighter Black Sea supplies
and stocking up ahead of the introduction of a new licensing
system for imports.
Turkish base oils demand has picked up ahead of the
start of the licencing system, which aims to curb the
illegal usage of base oils in the country. Lower volumes
of base oils offered from Russia and Uzbekistan provided
further price support, helping to leave balanced the supply
situation in the light grades market.
The new system is expected to take effect from 1 January
2014. Some lubricant blenders have applied for the new
licences, which will take between three and eight weeks to be
processed. The long application process has prompted some
buyers to consider taking advantage of any attractive price
offers to restock before the end of the year and to avoid the
risk of being unable to buy any product after 1 January.
A Russian producer has little spot availability of SN 150,
after loading two cargoes with a combined volume of 8,000t
of mostly SN 150 to take to Turkey at the end of October.
Prices for the material were pegged at $945-955/t cfr levels.
A blender will likely buy around 10,000t of base oils at
the end of November from the Black Sea and Baltic Sea
markets. The blender said European product is still too
expensive for Turkish buyers. Other buyers are holding out
for further price falls before committing to new purchases.
A Russian trading frm possibly sold 3,000t of light-grade
base oils loading in second-half November at around $945/t
fob. The freight rate was estimated at around $35/t. Freight
rates to Gebze have been creeping higher because of
increasing vessel activity amid higher vegetable oil exports
from Russia and Ukraine. These are shipped in the same
type of vessel as base oils.
A trading frm was negotiating over the sale of a small
cargo of SN 900 at levels close to $1,100/t cfr Turkey. It
expects a pick-up in shipping activity will boost demand for
marine lubricants, resulting in a subsequent rise in demand
for heavy-grade base oils such as SN 900.
A Turkish blender has issued a tender to buy 50,500t of
base oils, with a variance of 20pc above or below this level,
for the full calendar year of 2014. It requested 18,000t of
SN 150, 21,000t of SN 500, 8,500t of bright stock and 3,000t
of SN 100. It requested bids on a dap/cif Derince basis. The
tender closes on 11 November.
Another blender is negotiating its 2014 term supplies for
60,000t of base oils.
A western Mediterranean producer is offering a 3,000t
cargo of SN 150 within the published price range. No deal
has been concluded as price and specifcation differences
stymied any trade.
Some lingering supplies from the Fergana refnery
remain in the market. About 3,000t of light-grades from
Fergana are expected to be loaded in second-half November
out of Georgia.
Turkeys only domestic producer kept its prices
unchanged. It is offering SN 150 at 2,145 Turkish lira/t
($1,077/t) from the Izmir refnery, without service charges. It
offered SN 500 at TL2,220/t and bright stock at TL2,500/t.
TURKEY
India 0
US 2
Russia 12,864
Greece 6,130
Netherlands 961
Germany 0
France 1,205
Italy 13,949
Iran 64
Serbia 0
Uzbekistan 5,135
Belgium 2,935
Hungary 0
Turkmeninstan 0
AUG 2013
TurkStat
Poland 4,094
Spain 0
Morocco 0
Brazil 0
Ukraine 0
TURKEYS KEY BASE OIL SUPPLIERS t
Freight rates to Gebze, Turkey $/t
Route 3,000t 5,000t Route 3,000t 5,000t
Black Sea 27-29 24-25 Antwerp 65-68 55-58
Augusta 40-43 31-34 Baltic 80-85 70-75
UAE 85-90 77-80 Mumbai 97-100 92-95
* provided at market close on 31 October by Borachart (www.borachart.com)
Page 14 of 28
Russian base oil prices slid for a sixth straight week,
pressured by stable supplies and weak buying activity.
Prices in the Baltic Sea market were under pressure
because of low buying interest, weak demand from
west Africa and plenty of availability from Russian and
Belarusian producers.
But cargo discussions on a fob Baltic basis were
limited. Buyers were expecting lower prices, but the cost
of sellers product in their tanks prevented them from
offering the supplies at lower prices without incurring
losses. But a trading frm was ready to discuss levels below
$950/t fob Baltic for supplies if there were frm interest
from a buyer. It had started offering the same cargo in
September at around $1,050/t.
A trading frm is possibly negotiating the sale of a cargo
of around 8,000t into the Latin American market. With
fows to markets like Nigeria slowing, such a shipment
will help to ease the pressure on Baltic prices. But the
specifcations of the base oils required, with a viscosity
index higher than 95, may be hard to meet with Russian SN
500 usually below this level.
A Russian major producer has been almost completely
absent from the spot market since the frst week of
October. Only about 1,000t of spot supplies was loaded
for a buyer in Europe last week. But the producer has no
plans to cut its prices. It expects European demand to pick
up ahead of Europes implementation of a 3.7pc import
duty on Russian cargoes from 1 January.
Base oil loadings from Baltic ports fell to 25,500t in
October, down by 20,000t compared with the previous
month (see table on p15). While cargo loadings fell,
refnery run rates in Russia rose, with Nizhny Novgorods
base oils unit resuming operations from early October
following maintenance work.
Prices in the market for heavy-grade base oils got
some support from expectations of lower supplies. The
Volgograd refnery will not produce SN 900 in November
because of maintenance at one of its units.
Naftan struggles to sell SN 500
Belarus Naftan refnery again offered 4,000t of SN 500
for November loading. Its offer fell from 655/t at the
end of last week to 615/t ($836/t) fca Novopolotsk by 31
October. The cost of bringing the product to a Baltic port
to offer on a fob Baltic basis is around $45/t, excluding
any trading margin.
But there was no buying interest. Several buyers were
concerned about the quality of the product following the
Baltic Sea Group I $/t
Low High
SN 150 fob 890.00 910.00 -2.50
SN 500 fob 930.00 950.00 -12.50
Black Sea Group I $/t
Low High
SN 150 fob 900.00 915.00 -2.50
SN 500 fob 875.00 915.00 -7.50
Russian base oils, lubes rail/river exports 000t
Sep Aug Sep Aug
Rail
Overland 40.60 44.10 -3.50 Baltic 30.52 28.38 +2.14
Afganistan 0.00 0.00 +0.00 Kaliningrad 13.91 9.00 +4.91
Armenia 0.06 0.00 +0.06 Liepaja 7.04 4.82 +2.22
Azerbaijan 0.98 0.44 +0.54 Riga 9.26 8.47 +0.79
Belarus 1.59 1.02 +0.57 Ventspils 0.00 0.00 +0.00
China 14.90 9.96 +4.94 St.Petersburg 0.31 6.09 -5.78
Hungary 0.11 0.11 +0.00
North Korea 0.00 0.00 +0.00 Black Sea 14.44 8.45 +5.99
Finland 1.48 1.85 -0.37 Eisk 0.00 0.00 +0.00
Kazakhstan 4.92 7.57 -2.65 Feodosiya 0.00 0.00 +0.00
Kyrgyzstan 0.89 0.66 +0.23 Kavkaz 3.60 0.29 +3.31
Latvia 0.95 1.35 -0.40 Nikolaev 0.00 0.00 +0.00
Lithuania 1.98 3.96 -1.98 Novorossiisk 9.30 6.03 +3.27
Moldova 0.24 0.31 -0.07 Odessa 1.54 2.13 -0.59
Mongolia 0.52 0.61 -0.09 Kerch 0.00 0.00 +0.00
Romania 1.20 1.42 -0.22
Poland 0.96 0.64 +0.32 River
Slovakia 0.00 0.00 +0.00 Volgograd 18.30 17.16 +1.14
Tajikistan 0.87 0.69 +0.18
Turkmenistan 0.02 0.25 -0.23 Far East
Ukraine 8.54 12.38 -3.84 Nakhodka 0.10 0.10 +0.00
Uzbekistan 0.39 0.88 -0.49
Total Russia rail, river exports 104.34 107.11 -2.77
Naushki Group I $/t
Low High
SN 150 cpt 830.00 860.00 +15.00
SN 500 cpt 910.00 960.00 +0.00
RUSSIA AND FSU
Russian base oil, lubes rail/river exports by supplier 000t
Sep Aug Sep Aug
Volgograd 36.68 32.35 +4.33 Omsk 8.76 9.00 -0.24
by rail 18.38 15.19 +3.19 Yaroslavl 5.57 4.82 +0.75
by river 18.30 17.16 +1.14 Ufa 7.30 8.47 -1.17
N.Novgorod 2.50 5.96 -3.46 Orsk 0.00 0.00 +0.00
Perm 17.95 25.04 -7.09 Other 5.31 6.09 -0.78
Novokuibyshevsk 7.11 7.47 -0.36
Angarsk 13.16 7.91 +5.25
Total 104.34 107.11 -2.77
Page 15 of 28
RUSSIA AND FSU
plants recent shutdown for maintenance. Others cited a
lack of demand for fob Baltic supplies. Others were put off
by the long loading period, during the month of November,
at a time when the base oil market is backwardated.
Demand from Baltic blenders was weak. A buyer was
planning to look for lower priced cargoes in about two
weeks. Ukrainian blenders were able to secure supplies
of Russian origin at lower price levels compared with the
offers from Naftan.
The Ukrainian market remained relatively stable
compared with the Baltic market, even with plenty of
supplies offered into the country. Small volumes of SN 150
and SN 350 from Rosneft refneries were bought this week
at around $860-870/t cpt on a Russian-Ukraine border
basis. Bright stock was offered from Yaroslavl refnery at
$985/t cpt.
Supplies from Ufa refnery were offered into the
market at $870/t on a cpt Russia-Ukraine border basis.
Lower quality SN 150 from Baku refnery was offered on
a formula-price basis linked to fuel oil. The offer was the
equivalent of around $850/t cpt on the Ukraine border.
A distributor of Lukoils product recently cut its prices
in Ukraine by 100 hryvnia/t ($12.20/t).
Rosneft failed to sell all of its November supplies
offered from its Novokuibyshevsk refnery in its recent
tender, so it reoffered the remaining supplies later this
week. It had more heavy grades to offer than light grades.
Demand for its supplies from its Yaroslavl refnery was
stronger because of the products better quality and lower
transportation costs to the Baltic market. A small volume
of SN 400 and bright stock from the Yaroslavl refnery was
bought at $880/t on a cpt Russia-Latvia border basis and
$920/t cpt respectively.
Gazpromneft was offering around 8,000t of base oils
from its Omsk and Yaroslavl refneries for November
loading. The producer had tight availability of SN 150, with
SN 500, SN 650 and bright stock accounting for about 90pc
of the volume offered.
Trading frms were discussing levels around $880-885/t
cpt on the Russia-Latvia border for SN 500 and $850-855/t
for SN 150.
Turkish activity delights
Sellers reported a pick-up in buying activity from the
Turkish market. A trading frm received three requests for
cargoes this week, compared with almost no such interest
for second-half October. Turkish demand could be getting
a boost as buyers start to build stocks before the launch
of a new licensing system in January.
A 3,000t cargo of light grades was possibly sold at
around $945/t cfr Turkey. The equivalent fob Black Sea
price, refecting high freight costs for the port of loading,
is around $910/t fob. The cargo, originating from the
Novokuibyshevsk refnery, is expected to load in second-
half November.
A producer loaded two cargoes with a combined
volume of 8,000t of mostly light grades from the Black Sea
bound for Turkey at the end of October. It consequently
has limited availability of SN 150. But demand for its SN
500 was weak. Buyers in the UAE and India were instead
well supplied with product from Iranian refners whose
cdxXLbalticPremiumWeek: Baltic SN 150 vs VGO, vs domestic NWE $/t

0
50
100
150
200
250
300
Premium to VGO 1.6% cif NWE Discount to fob domestic NWE
Baltic SN 150 vs VGO, vs domestic NWE $/t
Baltic loadings t
Port/terminal Vessel Next port Volume B/L Date
Svetly /Lukoil Harbour Muran Ghent 3,100 01-02 Nov
Svetly /Lukoil Key Bora Dordrecht/Antwerp 3,200 26 Oct
Riga/OVI Lexus Humburg 2,700 26 Oct
Riga/OVI Aksaz C Hull 3,500 24 Oct
Svetly /Lukoil Key Bora Gothenburg 2,100 10 Oct
Svetly /Lukoil Loya Rotterdam/Singapore 3,000 13 Oct
Liepaja/DG Nordic Helsinki Rotterdam 8,000 13 Oct
Svetly /Lukoil Ursula Essberger Rotterdam/Singapore 4,000 04 Oct
Riga/OVI MRC Semiramis Lagos 4,800 29 Sep
Svetly /Lukoil Loya Dordrecht 3,000 27 Sep
Russian and Belarusian base oil export duty * $/t
Nov 2013 Oct 2013 Sep 2013 Aug 2013 Jul 2013 Jun 2013
261.20 274.80 264.40 250.60 243.60 237.10
May 2013 Apr 2013 Mar 2013 Feb 2013 Jan 2013 Dec 2012
249.70 265.00 277.60 266.20 261.10 261.70
* tax paid by producer for base oils export outside of Russia, Belarus,
Kazakhstan, Tajikistan and Kyrgyzstan
Page 16 of 28
Perm $/t
To Baltic Sea 526
To Black Sea 449
To Naushki 452
Omsk $/t
To Baltic Sea 473
To Black Sea 425
To Naushki 505
Ufa $/t
To Baltic Sea 517
To Black Sea 479
To Naushki 452
Volgograd $/t
To Baltic Sea 534
To Black Sea 541
To Naushki 384
FSU KEY PRODUCERS SN 500 PRICE (NETBACK) * $/t
* price calculated by subtracting transport costs and taxes between the producer and the fob Baltic, fob Black Sea and cpt Naushki pricing point.
RUSSIA AND FSU
price ideas were below published price levels.
Supplies from Uzbekistans Fergana refnery have
halted for now, according to its regular customers. The
plant has production capacity of up to 200,000 t/yr of
base oils. The refners management is under investigation
and there is staff rotation at the refnery. So export fows
are unlikely to resume this year.
A trading frm was offering SN 900 out of Odessa port
at levels close to $1,100/t cif Gebze.
Slowing Chinese demand and weaker prices curbed
Gazpromneft and Lukoils interest in moving more
November-loading Russian supplies to this market. A better
netback for moving supplies to the Baltic market, and
rising freight costs to China to cover the use of railcars
with heating, also deterred producers.
But the lower availability of supplies for China, as well
as higher freight costs, helped to support prices. Demand
for SN 150 improved slightly because of lower availability
of these grades from Russia that resulted in higher prices.
Rosneft closed its November export tender for supplies
from its Angarsk refnery. It plans to load around 10,000t
of base oils to take to China via Naushki in November. The
producer possibly sold its light grades at around $850-870/t
cpt and heavy grades at close to $970/t cpt Naushki levels.
Another producer received much lower bids for its
cargoes, at $850/t cpt Naushki for SN 150 and only $20-
50/t higher for SN 500 and SN 650. The bids were for
relatively small volumes. The refner does not plan to sell
any supplies to China this month.
A third refner failed to receive any bids in response to
its offers, refecting the slowdown in demand.
The Argus Russian diesel index was steady at
31,475 roubles/t ($981.70/t). Prices were supported by
higher demand for winter-grade diesel and limited spot
availability from several refneries.
cdxXLruExportLine: Russian rail exports via Baltic/Black Sea 000 t
hhh
0
25
50
75
100
Sep 12 Dec 12 Mar 13 Jun 13 Sep 13
Total Baltic Sea Black Sea
Russian rail exports via Baltic/Black Sea 000 t
Page 17 of 28
Group I bulk export prices $/USG $/t
Low High Low High
SN 150 fob 3.04 3.20 -0.01 921.00 970.00 -3.00
SN 500 fob 3.45 3.59 -0.02 1,028.00 1,070.00 -6.00
Bright stock fob 3.75 3.83 -0.04 1,103.00 1,126.00 -12.00
Group II bulk export prices $/USG $/t
Low High Low High
N100 fob 2.91 3.07 -0.01 902.00 952.00 -3.00
N200 fob 3.08 3.24 -0.01 939.00 988.00 -3.00
N220 fob 3.08 3.24 -0.01 939.00 988.00 -3.00
N600 fob 3.90 4.06 -0.05 1,170.00 1,218.00 -15.00
US base oils prices have extended their steady
downtrend, as seasonally low domestic demand prompts
sellers to offer supplies at increasingly wide discounts.
Prices for heavy grades continue to fall faster than lighter
grades, erasing more of the price premium they have
established over light grades this year.
Blenders inventory management ahead of the end of
the year, and expectations of a further fall in prices, has
added to a reluctance to buy.
The sustained fow of large export volumes has added
to signs that supplies remain plentiful, even ahead of the
expected rise in availability from early next year as new
production capacity comes on line.
The slide in domestic and export prices have spurred
expectations of an adjustment to posted price levels.
The discount of Argus spot prices to posted prices for
light-grade Group I base oils is at its widest level since
February. The discount of spot prices to Group II posted
prices has increased to its widest level this year.
Discounts widen to spur demand
Large-volume buyers were being offered discounts of
$0.10-0.15/USG for spot supplies in the domestic market.
Discounts of as much as $0.50/USG or more, at prices close
to, or lower than, diesel prices, were being offered for
some export supplies.
Such price levels have attracted buying interest from
markets like India. They have also kept shut the arbitrage
to move supplies from Asia-Pacifc to the US, curbing the
prospect of building supplies from imports.
The US exports include an unusually large 27,000t
cargo of light-grade Group II base oils set to head for India
in second-half November on the vessel Atlantic Canyon.
The supplies are from two US Gulf coast producers. The
Domestic prices $/USG $/t
Low High Low High
Group I
SN 150 3.32 3.48 -0.02 1,006.00 1,054.00 -6.50
SN 500 3.71 3.88 -0.02 1,106.00 1,156.00 -4.50
Bright stock 4.16 4.32 -0.04 1,223.00 1,270.00 -12.00
Group II
N100 3.22 3.38 -0.01 998.00 1,048.00 -3.00
N200 3.40 3.55 -0.01 1,037.00 1,083.00 -1.50
N220 3.40 3.55 -0.01 1,037.00 1,083.00 -1.50
N600 4.10 4.27 -0.05 1,230.00 1,281.00 -13.50
Group III
4cst 4.39 4.55 -0.01 1,383.00 1,433.00 -3.00
6cst 4.48 4.64 -0.02 1,411.00 1,462.00 -6.50
8cst 4.48 4.64 -0.02 1,411.00 1,462.00 -6.50
Naphthenic domestic prices $/USG $/t
Low High Low High
Pale oil 60 3.89 4.06 -0.02 1,153.00 1,203.00 -4.50
Pale oil 100 3.73 3.88 -0.02 1,093.00 1,137.00 -4.50
Pale oil 500 3.71 3.85 -0.02 1,066.00 1,106.00 -6.00
Pale oil 2000 3.77 3.91 -0.02 1,076.00 1,116.00 -5.00
Naphthenic bulk export prices $/USG $/t
Low High Low High
Pale oil 60 fob 3.67 3.82 -0.01 1,087.00 1,132.00 -4.50
Pale oil 100 fob 3.51 3.67 -0.01 1,029.00 1,076.00 -3.00
Pale oil 500 fob 3.49 3.64 -0.01 1,003.00 1,046.00 -4.50
Pale oil 2000 fob 3.54 3.70 -0.01 1,010.00 1,056.00 -2.50
US
cdxXLusHeatingPremiumWeek: US SN 150 domestic premium to heating oil $/USG

0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
SN 150
US SN 150 domestic premium to heating oil $/USG
Page 18 of 28
shipment extends a trend of steady and high US export
fows to India throughout the year.
The freight rate for the shipment was around $82/t,
with sales into India at around $1,005-1,020/t cfr. The
netted back fob US Gulf coast price, excluding any trading
margin and other costs, is around $2.98-3.02/USG.
The move to clear such large volumes of supplies
comes ahead of the expected rise in market availability
following the planned start-up of Chevrons new Group II
plant at its Pascagoula refnery early next year.
The large export cargo also included a small volume
of bright stock, sold to India at around $1,200/t cfr. The
equivalent netted back US Gulf coast price is around
$3.80/USG.
The surge in exports to India, and signs of rising
shipments to Europe, helped to counter the impact of
slow buying interest from Mexico. That countrys base
oils production has surged this year, while fnished lube
demand has ebbed (see p23).
A trading frm likely won a tender to supply Venezuela
with a 10,130t cargo of Group I base oils in early
November, along with a second optional 8,300t cargo in
second-half November. The frst cargo, for 4-7 November
delivery, will likely be supplied from the US, with the
second cargo from Europe.
Colombia has possibly issued a tender to buy 2,500t
of four different grades of Group I and Group II base oils.
The request was expected to be covered by supplies from
the US.
The clear-out of surplus US supplies at the end of this
year will be followed by maintenance at several plants in
the frst quarter of next year, including at Motivas Port
Arthur, Texas refnery starting in January.
A deferred 20-day turnaround at PBF Energys
US
US SN 500 forward premium to heating oil
$/USG $/t
Midpoint Midpoint
Dec 2013 0.53 -0.01 157.55 -4.75
Jan 2014 0.53 -0.02 157.65 -5.25
Feb 2014 0.53 na 158.35 na
1Q 2014 0.53 -0.02 157.95 -5.95
2Q 2014 0.56 -0.03 166.90 -8.90
The premium shows the implied forward-curve profitability of fob US
export SN 500 relative to Nymex heating oil futures.
US SN 500 forward prices $/USG $/t
Low High Low High
Dec 2013 3.50 3.55 -0.01 1,041.50 1,056.40 -4.80
Jan 2014 3.49 3.54 -0.02 1,041.40 1,056.30 -4.35
Feb 2014 3.49 3.54 na 1,040.75 1,055.65 na
1Q 2014 3.49 3.54 -0.01 1,040.40 1,055.30 -3.85
2Q 2014 3.46 3.51 -0.01 1,031.60 1,046.50 -2.55
maintain its existing profit margin relative to Nymex heating oil futures.
Crude $/USG $/bl

Nymex WTI crude front month 2.29 -0.02 96.38 -0.73
SN 500 premium to WTI 1.23 +0.00 51.47 -0.11
Argus Sour Crude Index (ASCI) 2.22 +0.01 93.20 +0.24
SN 500 premium to ASCI 1.30 -0.03 54.65 -1.08
Oil products $/USG $/bl

NYH heating oil barge 2.94 +0.09 123.48 +3.71
Low sulphur VGO 0.5% cargo 2.64 -0.07 110.88 -2.73
High sulphur VGO 2% cargo 2.58 -0.07 108.38 -2.73
Oil products premiums
Heating oil premium to WTI 0.65 +0.11 27.10 +4.44
Heating oil premium to VGO 2% 0.36 +0.16 15.10 +6.44
SN 500 premium to heating oil 0.58 -0.11 24.36 -4.57
SN 500 premium to VGO 2% 0.94 +0.05 39.47 +1.89
US N100 vs SN 150, US 4cst vs N100 $/USG cdxXLusg123Premium: US N100 vs SN 150, US 4cst vs N100 $/USG

-0.50
0.00
0.50
1.00
1.50
N100 vs SN 150 4cst vs N100
US SN 500 premium to VGO 2% $/USG cdxXLusVgoPremiumWeek: US SN 500 premium to VGO 2% $/USG

0.20
0.40
0.60
0.80
1.00
1.20
1.40
LineSet1
Page 19 of 28
US
Paulsboro refnery will begin at the end of January. PBF
also plans to add additional infrastructure to its Delaware
refnery to be able to move more Bakken crude to the
Paulsboro plant. While refnery margins are likely to
beneft from the competitive price of the crude, Bakken is
not considered a lube-friendly crude.
Base oil prices benefted from weakening vacuum gasoil
(VGO) prices relative to crude and diesel. VGO demand is
expected to ease in November, with much of the autumn
plant turnaround activity coming to an end.
The SN 150 premium over the four-week average US
Gulf coast VGO price nudged up to $0.72/USG, its highest
level since May. The SN 150 premium over four-week
average ultra-low sulphur diesel prices nudged down to
$0.45/USG.
US naphthenic base oil prices have slipped, pressured
by lower crude values. But supplies remain more balanced
than for paraffnic grades, while seasonal demand in the
southern hemisphere is helping to counter slower buying
interest in the northern hemisphere ahead of its winter.
But the recent price strength has left values at
signifcant premiums to Group II light-grade base oils, as
well as to light-grade prices in markets like India.
US pale oil 60 is holding close to its largest premium
to US light-grade base oils in more than three years. Pale
oil 60 export prices are also at their highest premium to
Indian light-grade prices in more than three years.
Even with the lower prices, margins are holding frm.
The premium of domestic pale oil 60 over the four-week
average of Light Louisiana Sweet crude frmed to $65/bl,
its highest level in more than a year.
NAPHTHENIC BASE OILS
cdxXLusExportLineBrazil: US base oil exports to Brazil 000 bl
hhh
0
100
200
300
400
500
Jul 03 Jul 05 Jul 07 Jul 09 Jul 11 Jul 13
Brazil
EIA
US base oil exports to Brazil 000 bl
US Pale oil 60 premium to crude $/bl cdxXLusnapPremiumWeek: US Pale oil 60 premium to crude $/bl
hhh
30
40
50
60
70
80
Nov 12 Feb 13 May 13 Jul 13 Oct 13
Crude front month = 0
Premium to WTI Premium to LLS Premium to Brent

Argus European Base Oils
Markets 2014
19-20 March 2014, Istanbul
Save 200 with the super early
discount. Register online before
15 November.
argusmedia.com/euro-baseoils Events
Consulting
Market Reporting
Page 20 of 28
Group II *
Calumet Shreveport
Effective
from
$/USG
80 15 Aug 13 3.59 +0.10
100 15 Aug 13 3.56 +0.10
150 15 Aug 13 3.99 +0.10
325 15 Aug 13 4.65 +0.15
Group II+ *
SK Lubricants Gulf coast Phillips 66 Gulf coast
Effective
from
$/USG
Effective
from
$/USG
50/60 16 Aug 13 4.55 +0.10
70/80 19 Aug 13 5.16 +0.10 16 Aug 13 4.65 +0.10
Group II+ *
ExxonMobil Gulf coast
Effective
from
$/USG
110/130 16 Aug 13 3.87 +0.15
190 16 Aug 13 3.82 +0.15
Group III *
Effective
from
$/USG
Effective
from
$/USG
4cst 19 Aug 13 5.46 +0.10 16 Aug 13 4.93 +0.10
6cst 19 Aug 13 5.46 +0.10
8cst 19 Aug 13 5.44 +0.10 16 Aug 13 5.03 +0.10
US POSTED PRICES $/USG
*the column shows the price difference between the current and previous
posted price
Group I *
ExxonMobil Gulf coast HollyFrontier Paulsboro Refning east coast Calumet Shreveport
Effective
from
$/USG
Effective
from
$/USG
Effective
from
$/USG
Effective
from
$/USG
70/75 23 Aug 13 3.61 +0.07
100 16 Aug 13 3.67 +0.15 23 Aug 13 3.61 +0.07 21 Aug 13 3.92 +0.15
150 16 Aug 13 3.71 +0.15 23 Aug 13 3.79 +0.07 21 Aug 13 3.86 +0.15
250 23 Aug 13 3.93 +0.07
300/350 16 Aug 13 3.86 +0.15
500 23 Aug 13 4.41 +0.15 21 Aug 13 4.37 +0.15
600/650 16 Aug 13 4.23 +0.15
700 16 Aug 13 4.23 +0.15 21 Aug 13 4.40 +0.15 21 Aug 13 5.05 +0.15
Bright stock 16 Aug 13 4.56 +0.15 23 Aug 13 4.75 +0.15 21 Aug 13 4.71 +0.15 21 Aug 13 4.77 +0.15
Group II *
Phillips 66 Gulf coast Chevron west coast Motiva Gulf coast FHR Gulf coast
Effective
from
$/USG
Effective
from
$/USG
Effective
from
$/USG
Effective
from
$/USG
70 16 Aug 13 3.73 +0.10 20 Aug 13 3.63 +0.10
75/80 16 Aug 13 3.73 +0.10 20 Aug 13 3.63 +0.10
100/120 16 Aug 13 3.65 +0.10 26 Jul 13 4.07 +0.25 08 Aug 13 3.62 +0.10 20 Aug 13 3.63 +0.10
200/220 16 Aug 13 4.00 +0.10 26 Jul 13 4.37 +0.25 08 Aug 13 4.00 +0.15 20 Aug 13 3.95 +0.10
600 16 Aug 13 4.60 +0.10 26 Jul 13 5.20 +0.25 08 Aug 13 4.55 +0.10 20 Aug 13 4.52 +0.05
cdxXLusPosted150Week: US domestic SN 150 vs posted prices $/USG
hhh
3.00
3.20
3.40
3.60
3.80
4.00
US SN 150 ExxonMobil HollyFrontier
Paulsboro
US domestic SN 150 vs posted prices $/USG
cdxXLusPosted600Week: US domestic N600 vs posted prices $/USG
hhh
4.00
4.50
5.00
5.50
US N600 Phillips 66 Chevron Motiva
FHR
US domestic N600 vs posted prices $/USG
Page 21 of 28
US POSTED PRICES $/t
*the column shows the price difference between the current and previous
posted price. The $/t price is converted from the $/USG price.
Refer to www.argusmedia.com for methodology with the gallons-to-tonnes
conversion factors.
Group I *
ExxonMobil Gulf coast HollyFrontier Paulsboro Refning east coast Calumet Shreveport
Effective
from
$/t
Effective
from
$/t
Effective
from
$/t
Effective
from
$/t
70/75 23 Aug 13 1,119.10 +21.70
100 16 Aug 13 1,130.36 +46.20 23 Aug 13 1,111.88 +21.56 21 Aug 13 1,203.44 +46.05
150 16 Aug 13 1,138.97 +46.05 23 Aug 13 1,163.53 +21.49 21 Aug 13 1,165.72 +45.30
250 23 Aug 13 1,194.72 +21.28
300/350 16 Aug 13 1,169.58 +45.45
500 23 Aug 13 1,331.82 +45.30 21 Aug 13 1,311.00 +45.00
600/650 16 Aug 13 1,260.54 +44.70
700 16 Aug 13 1,260.54 +44.70 21 Aug 13 1,302.40 +44.40 21 Aug 13 1,505.30 +44.71
Bright stock 16 Aug 13 1,354.32 +44.55 23 Aug 13 1,410.75 +44.55 21 Aug 13 1,394.16 +44.40 21 Aug 13 1,415.69 +44.52
Group II *
Phillips 66 Gulf coast Chevron west coast Motiva Gulf coast FHR Gulf coast
Effective
from
$/t
Effective
from
$/t
Effective
from
$/t
Effective
from
$/t
70 16 Aug 13 1,156.30 +31.00 20 Aug 13 1,125.30 +31.00
75/80 16 Aug 13 1,141.38 +30.60 20 Aug 13 1,110.78 +30.60
100/120 16 Aug 13 1,128.76 +30.92 26 Jul 13 1,257.63 +77.25 08 Aug 13 1,122.20 +31.00 20 Aug 13 1,122.58 +30.92
200/220 16 Aug 13 1,219.00 +30.48 26 Jul 13 1,332.85 +76.25 08 Aug 13 1,220.00 +45.75 20 Aug 13 1,203.76 +30.48
600 16 Aug 13 1,386.90 +30.15 26 Jul 13 1,567.80 +75.38 08 Aug 13 1,374.10 +30.20 20 Aug 13 1,362.78 +15.07
Group II *
Calumet Shreveport
Effective
from
$/t
80 15 Aug 13 1,107.87 +30.86
100 15 Aug 13 1,093.85 +30.73
150 15 Aug 13 1,222.38 +30.64
325 15 Aug 13 1,416.72 +45.70
Group II+ *
Effective
from
$/t
Effective
from
$/t
50/60 16 Aug 13 1,467.38 +32.25
70/80 19 Aug 13 1,625.40 +31.50 16 Aug 13 1,488.00 +32.00
Group II+ *
ExxonMobil Gulf coast
Effective
from
$/t
110/130 16 Aug 13 1,211.31 +46.95
190 16 Aug 13 1,188.02 +46.65
Group III *
Effective
from
$/t
Effective
from
$/t
4cst 19 Aug 13 1,719.90 +31.50 16 Aug 13 1,565.28 +31.75
6cst 19 Aug 13 1,719.90 +31.50
8cst 19 Aug 13 1,713.60 +31.50 16 Aug 13 1,574.39 +31.30
US base oil exports, imports 000 bl
cdxXLusImportExport: US base oil exports, imports000 bl

-2,000
-1,000
0
1,000
2,000
3,000
Jul 12 Nov 12 Mar 13 Jul 13
Exports Imports Net exports
EIA
US base oil production, sales 000 bl
cdxXLusProduction: US base oil production, sales 000 bl

2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Jul 12 Oct 12 Jan 13 Apr 13 Jul 13
Production Sales
EIA
Page 22 of 28
MARKET NEWS AND ANALYSIS
1S-Oils lube unit sees weaker 3Q profit
2South Korean refiner S-Oils lubricants unit saw profit
fall in the third quarter of the year, as rising feedstock
costs outweighed higher base oil prices.
The lube unit posted an operating profit of 40.2bn won
($38mn) in the three months to end-June. The profit was
47pc lower than the same period last year and 19pc down
from the previous quarter.
Lube and base oil sales of W446.7bn were 17pc lower
than the same period last year but 11pc higher than the
previous quarter. The rise in sales from the second quarter
reflected the increase in sales volume to 30,000 b/d from
26,000 b/d the previous quarter.
S-Oils base oil units have had substantial maintenance
this year. The work peaked in the second quarter of the
year and finally ended in early August. The lube base oil
units operating rate subsequently rose to 90.4pc in the
third quarter, up from 70.2pc the previous quarter.
Sales also benefited from higher base oil prices in
the third quarter. Asia-Pacific Group II base oil prices
averaged $1,031/t in the third quarter, up 1.5pc from
the second quarter. European Group III prices averaged
$1,257/t in the third quarter of the year, up 0.5pc from
the previous quarter. South Korea is Europes largest
supplier of premium-grade base oil imports.
But the quarter-on-quarter rise in base oil prices lagged
the 5pc increase in crude prices. Crude prices themselves
lagged the 5.8pc rise in diesel prices. The result was
higher feedstock costs and an increasing incentive to use
that feedstock to produce more diesel.
The lube and base oil units operating profit margin
subsequently fell to 9pc from 12.3pc the previous quarter.
The margin has held below the 10pc level in three of the
last four quarters. By contrast, it had held above the 10pc
level for 13 quarters in a row until the third quarter of
2012.
cdxXLprofitSoil: S-Oil lube profit margin vs refining profit margin %

-10
0
10
20
30
40
Q1
2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Lube profit margin Refining profit margin
S-Oil lube proft margin vs refning proft margin % Castrol India sales vs raw material costs bn INR cdxXLprofitCastrol: Castrol India sales vs raw material costs bn INR

3
4
5
6
7
8
9
Q1
2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Sales Raw material costs
Lube margins also held below the 16pc profit margin
posted by S-Oils petrochemicals unit. But combined with
petrochemicals, the two units countered the W168.6bn
loss from S-Oils refining operations and helping the
company to post a W25.2bn operating profit.
1Castrol Indias 3Q profit rises
2Castrol India, Indias largest independent lubricant
supplier, saw its operating profit margin rise in the
three months to end-September compared with last
year as sales rose while costs fell.
The companys operating profit was 1.42bn rupees
($23mn), up 24pc from the same three-month period a
year earlier. Net profit rose 22pc to Rs1.04bn.
Profit rose on the back of firm sales, up 0.3pc to
Rs7.23bn. The rise in sales came even as the countrys
industrial and economic activity struggled to revive. Indias
industrial production rose just 0.1pc in the five months
to August. The countrys car sales of 420,667 in the three
months to end-September were 2pc higher than last year.
The B2B [business to business] and in particular, the
building and construction segment, were under pressure
and witnessed lower volumes during the quarter under
review, said Castrol Indias managing director, Ravi
Kirpalani. This volume drop was partially offset by a
strong performance in the personal mobility sector i.e.
the passenger car and two wheeler engine oil segments.
The rise in sales coincided with a 4pc drop in costs
to Rs58.14bn on the back of lower sales promotions
costs. Raw materials costs rose, but the 3pc increase to
Rs40.03bn also lagged far behind the rise in sales.
Raw material costs rose even as imported cargo prices
for Group II N150 base oils fell 1pc in the third quarter
of this year to an average of $1,068/t cfr India. But the
value of the Indian currency relative to the US dollar
slumped during the third quarter of this year to its
Page 23 of 28
weakest level on record, increasing the cost of imports.
With sales rising and costs falling, Castrol Indias
operating profit margin improved to 19.6pc from 15.9pc
for the same period a year earlier.
The company forecast that high crude and base oil
prices, as well as Indias slow economic growth and
volatile currency, are likely to affect growth and margins
in the short term.
1Mexicos September base oil output rises
2Mexicos base oils production rose in September for a
12th straight month, ahead of the planned shutdown of
the countrys only base oils unit in October.
Base oils output from state-owned oil firm Pemexs
245,000 b/d Salamanca refinery totalled 4,340 b/d in
September. The volume was 22pc higher than the same
month a year earlier and 9pc higher than August volumes.
Total production of 1.31mn bl in the first nine months
of the year was 30pc higher than the same period last
year. The rise in base oils output in September outpaced
the 1.5pc increase in processing rates at the Salamanca
refinery from the previous month to 167,523 b/d. But it
lagged the 24pc rise in asphalt output to 11,652 b/d.
The 305,000 t/yr Group I base oils unit at the
Salamanca refinery began a one-month shutdown around
mid-October. The shutdown had been delayed from earlier
in the summer.
The rise in domestic base oil output this year has
allowed Pemex to boost domestic sales, curbing Mexicos
requirement for imports. Pemexs base oil and lube
sales of 4,515 b/d in September were 16pc higher than
the same month a year earlier and 2pc higher than the
previous month.
Mexicos base oil imports fell to 26,318 kilolitres
(23,000t) in July, their lowest level for the month of July
in at least six years. Imports from the US have fallen by
Mexican base oil production 000 t
cdxXLmxProductionLine: Mexican base oil production 000 t
hhh
5
10
15
20
25
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13
Production
more than 45pc in the first seven months of the year.
Even with this months shutdown of the Salamanca
refinerys base oils plant, Mexican demand for base oil
imports has failed to revive.
The drop in buying interest also reflects the impact of
the countrys slowing economic and industrial activity.
The countrys automobile sales and production fell in
September for the first time in six months.
1Europes August lube sales mixed
2Spanish and French lubricating oil demand fell in
August, contrasting with a rise in UK and German sales.
Italian lubricating oil demand rose in September after
holding steady the previous month.
Spanish lube sales fell 5pc in August to 22,500t after
rising the previous month. The drop was slower than the
7.5pc fall in sales during the first eight months of the
year, coinciding with signs that the countrys car sales
have bottomed out.
French lubricating oil demand fell 6pc in August to
35,683t. The fall outpaced the 4pc drop in sales during
the first eight months of the year. French industrial
production contracted by 3.5pc in August, its steepest
drop since November.
Italian lube demand rose 9pc in September to 36,000t.
The rise in sales helped to narrow the contraction in
demand in the first eight months of the year to just
0.7pc. The steadier lube demand came even as the
countrys car sales contracted in September for a 25th
straight month.
UK lubricating oil sales rose for a third straight month
in August, climbing 4pc to 34,000t. But base oil and
lubricating oil production slumped by 70pc in August
to just 14,000t. Output of 237,000t in the first eight
months of the year is 24pc lower than the same period
last year.
European lubricating oils demand 000 t cdxXLdemand_de_uk_es: European lubricating oils demand 000 t

0
20
40
60
80
100
120
Aug 11 Feb 12 Aug 12 Feb 13 Aug 13
Spain UK Germany France
Page 24 of 28
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1Germanys August lube demand rises
2Germanys lubricating oil demand rose in August for a
fifth straight month, boosted by strong sales of motor
and process oils.
Total lubricating oil sales rose 3pc in August to 79,553t,
according to Germanys federal office of economics and
export control. Total sales of 706,161t were 4pc higher than
the same period last year. Motor oil sales rose 20pc in August
to 21,941t. The size of the increase reflected a low base for
the same month last year, as well as signs that the slowdown
in German car sales and production is bottoming out.
German car sales contracted 1pc in September. But that
was an improvement from the 6pc fall in sales in the first
nine months of the year. German car production rose 9pc
in August to 394,991, outpacing the 2pc contraction in
output during the first eight months of the year.
Process oil sales rose 15pc in August to 15,142t. Demand
for machine oils and transformer oils also rose strongly.
Germanys industrial production rose by 0.4pc in August,
equalling its fastest pace of growth since March 2012.
Germanys base oils production of 58,316t in August was
9pc lower than the same month last year. But the volume
was the second-highest level this year.
1Idemitsu starts output from Indian lube plant
2Japanese refiner Idemitsu Kosan has begun producing
engine oils from a new lubricant plant in Maharashtra
state on Indias west coast.
Idemitsu Lube India, a unit of Idemitsu Kosan,
completed construction of its first lube plant in India in
August. The plant, about 65km southeast of Mumbai, has
capacity of 70,000 kilolitre/year (62,000 t/yr), although
current production is below this level.
Malaysias state-owned oil firm Petronas said last week
it planned to build a 60,000 t/yr lube plant near Mumbai.
Idemitsu has already started selling lubricants directly
to customers in India, a company spokesman said.
Savita Oil Technologies, one of Indias largest
independent lubricant blenders, had previously produced
and sold Idemitsus Genuine Oil brand of lubricants
through a 10-year technical and marketing agreement
signed in 2006. Idemitsu ended the deal last year.
Prista to build re-refnery in Ukraine
2Bulgarian lubricant producer Prista Oil plans to build an
80,000 t/yr re-refinery in Ukraine, making it one of the
first such plants in eastern Europe.
The company plans to invest $60mn on the project,
50km northwest to Kiev, where construction has yet to
start. The plant will include 9,000m of storage tanks to
collect waste oils and store re-refined products.
Ukraine has no base oils production, after the countrys
Kremenchug refinery closed its base oils unit in 2012. The
country mainly imports base oils from Russia and Belarus.
Prista is building another re-refinery near Tashkent,
Uzbekistan with capacity of around 40,000 t/yr. This
projected cost is less than $20mn as some of the facilities
have already been built. Prista owns 51pc in the joint
venture, with the remainder owned by Uzbekistans
Uznefteprodukt.
Prista is also discussing the possibility of building re-
refining units in Vietnam.
1Sinopec starts Dubai base oils operations
2Chinese state-controlled oil firm Sinopec has opened
a trading desk in Dubai this month to develop base oils
trading and to build its presence in the Mideast Gulf,
the former Soviet Union, India and Africa.
Sinopec is the first of Chinas major lubricant and base
oil producers to step into global base oils trading, with
CNOOC and PetroChina having no presence. Sinopec plans
to create a similar US operation in Houston, while trading
activity in Europe could be developed from Hamburg in
Germany where it already has an office.
The company has no plans to rent storage facilities for
now, as it concentrates initially on back-to-back deals. It
has had an office in Dubai since 2008, although it has been
focusing on other oil products. It is moving into a market
dominated by major producers like Shell, which has a
diversified base oils production chain, blending plants around
the world and a trading network in every key region.
Sinopec opened a trading desk for base oils in Singapore
in May last year to secure base oils for its lubricant plants
that are mostly in China, and well as for third parties.
It launched a 100,000 t/yr lubricants blending plant in
Singapore this year, its first plant outside China.
Sinopec is one of the seven biggest lubricants producers
in the world, producing more than 1.5mn t/yr of base oils
in China and sells about 1.8mn t/yr of lubricants.
Page 25 of 28
Upcoming / recent base oil plant maintenance / shutdowns
Refiner Location Timing Capacity Capacity affected Cause
JX Nippon Mizushima, Japan May 2014 for 2-3 months 225,000 t/yr All Maintenance
JX Nippon Wakayama, Japan May 2014 for 1 month 176,000 t/yr All Maintenance
San Joaquin California, US Feb 2014 for 2 weeks 7,500 b/d NA Maintenance
Motiva Port Arthur, Texas, US Jan 2014 for 38 days 2,050,000 t/yr Partial Maintenance
PBF Paulsboro, US End-Jan 2014 for 20 days 585,000 t/yr NA Maintenance
KPC Rotterdam, Netherlands Oct 2013 for 8 weeks 235,000 t/yr All Maintenance
JX Nippon Mizushima, Japan 8 Oct to end-Oct 2013 225,000 t/yr All Unplanned/refinery fire
Sinopec Shanghai, China 16 Oct 2013 for 20 days 750,000 t/yr 380,000 t/yr Unplanned
Pemex Salamanca, Mexico 13 Oct 2013 for 30 days 305,000 t/yr NA Maintenance
Sinopec Maoming, China 11 Oct 2013 for 45 days 250,000 t/yr All Maintenance
Calumet Schrevepot, Louisiana, US 23 Sep to 10 Oct 2013 11,800 b/d NA Maintenance
Sinopec Shanghai, China 2H Sep 2013 for 1 month 750,000 t/yr 380,000 t/yr Unplanned
Gazpromneft Omsk, Russia Sep 2013 240,000 t/yr All Maintenance
Naftan Novopolotsk, Belarus Sep 2013 200,000 t/yr All Maintenance
Formosa Mailiao, Taiwan 8 Aug to 2 Oct 2013 600,000 t/yr All Maintenance
Lukoil Nizhni-Novgorod, Russia Aug to Sep 2013 290,000 t/yr All Maintenance
JX Nippon Mizushima, Japan Early-Aug to 1H Oct 2013 180,000 t/yr All Unplanned/planned maintenance
JX Nippon Wakayama, Japan Early-Aug for 2 weeks 176,000 t/yr All Unplanned maintenance
PetroChina Daqing Petrochemical, China From early Aug 2013 for 35 days 450,000 t/yr 200,000 t/yr Maintenance
KPC Rotterdam, Netherlands From early Aug 2013 235,000 t/yr All Technical problem
S-Oil Onsan, South Korea 1 Jul to early Aug 2013 38,000 b/d 13,000 b/d Maintenance
Hainan Handi Hainan, China Early Jul to 17 Oct 2013 300,000 t/yr All Maintenance
Showa Shell Yokkaichi, Japan Early-Jun to end-Jul 2013 285,000 t/yr NA Maintenance
ExxonMobil Augusta, Italy Mid-May to Jun 2013 715,000 t/yr NA Maintenance
JX Nippon Mizushima, Japan 20 May to end-July 2013 225,000 t/yr All Maintenance
JX Nippon Yokohama, Japan 20 May 2013 for 1 month 80,000 t/yr All Maintenance
JX Nippon Wakayama, Japan 20 May 2013 for 1 month 176,000 t/yr All Maintenance
SK Lubricants Ulsan, South Korea 19 May to 11 Jun 2013 26,000 b/d All Maintenance
Rosneft Angarsk, Russia 10 May to 23 Jun 2013 250,000 t/yr All Maintenance
Pertamina Cilacap, Indonesia 7-27 May 2013 440,000 t/yr NA Maintenance
PetroChina Fushun, China Apr to 2H May 2013 150,000 t/yr NA Maintenance
Sinopec Yanshan, China Apr-Jun 2013 250,000 t/yr All Maintenance
American Refining Bradford, Pennsylvania, US Apr 2013 to Feb 2014 120,000 t/yr Partial Maintenance
Lotos Gdansk, Poland Apr 2013 for 1 month 245,000 t/yr All Maintenance
Petrogal Porto, Porgual End Apr for 41 days 185,000 t/yr All Maintenance
Sapref Durban, South Africa 26 Apr-1 Jul 2013 170,000 t/yr All Maintenance
CPC-Shell Kaohsiung, Taiwan From 23 Apr 2013 280,000 t/yr 140,000 t/yr Unplanned maintenance
S-Oil Onsan, South Korea 14 Apr 2013 for about 40 days 38,000 b/d 26,500 b/d Maintenance
Idemitsu Chiba, Japan 1 Apr to 31 May 2013 305,000 t/yr All Maintenance
BPCL Mumbai, India End-Mar to end-Apr 2013 175,000 t/yr All Maintenance
Repsol Puertollano, Spain End-Mar 2013 for 27 days 105,000 t/yr NA Maintenance
Uzbekneftegaz Fergana, Uzbekistan End-Mar for 3 weeks 485,000t/yr All Maintenance
Sinopec Jinan, China Mid-Mar 2013 for 60 days 150,000t/yr NA Maintenance
PetroChina Dalian Petrochemical, China Mid-Mar 2013 for 50 days 400,000 t/yr NA Maintenance
GS Caltex Yeosu, South Korea 16 Mar to 17 Apr 2013 26,000 b/d All Maintenance
San Joaquin California, US 1-15 Mar 2013 7,500 b/d 1,875 b/d Maintenance
Lukoil Volgograd, Russia Mar 2013 to 20 Apr 690,000 t/yr Partial Maintenance
Ergon Refining Newell, West Virginia, US Mar 2013 for 1 month 250,000 t/yr All Refinery upgrade
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.
MAINTENANCE AND SHUTDOWNS
Page 26 of 28
Jul 2013 Industrial overview Lube/base oils overview
Automobile
sales
Industrial
growth
Production Sales Import Export
000 Mom% Yoy% Yoy% 000t Mom% Yoy% 000t Mom% Yoy% 000t Mom% Yoy% 000t Mom% Yoy%
China 1,238 -12 +10 +9.70 456.2 -7 -24 684.5 +7 -7 213.1 +59 +77 1.4 -47 -69
Japan* 472 +5 -8 +1.80 163.5 -3 -3 124.6 +18 +13 5.8 +77 +18 42.0 -33 -16
Europe 983 -13 +5 -1.70
US* 1,315 -6 +14 +1.40 794.6 +6 +1 514.5 -14 +13 55.5 -62 -57 323.4 +3 -11

France 150 -22 +1 -1.90
Germany 253 -11 +2 -2.50 51.9 +31 -16 86.1 -8 +1 47.2 +2 -14 20.3 +37 +49
Italy 108 -12 -2 -4.30 40.0 +18 +14
Russia 235 -3 -8 -0.70 105.2 +6 -15
Spain 75 +3 +15 -1.40 26.8 +7 -15
Turkey 72 -3 +15 +4.60 20.2 +1 -28 74.6 -10 -23 54.4 -13 -21 0.0 0 0
UK 162 -25 +13 -1.10 47.0 +327 -11 33.0 -27 +27

Australia* 90 -24 +4 0.0 0 0 26.0 +9 -1 48.4 +130 +6 34.2 +5 +56
India 131 -6 -7 +2.60 95.0 +13 -31 231.0 +2 +13 184.4 +31 +11
Singapore +2.70 42.5 -30 +10 186.7 -4 -18
South Korea +0.90 24.2 -11 -32 297.2 +32 +31
Taiwan* 40 +23 -2 +2.10 19.6 +68 +168 3.5 -54 -26 29.0 -55 -33
Thailand* 98 -7 -25 -4.50 53.9 +33 +22 34.1 +61 +4 31.3 +15 +22

Argentina* 81 -8 +22 +2.80 6.3 -39 -51 11.1 +157 +411 0.0 0 0
Brazil* 342 +7 -6 +2.00 52.3 -4 -2 94.8 -14 +5 68.3 +8 +68 25.8 +253 +640
Mexico* 87 +4 +13 -0.50 21.0 +8 +41
* 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.
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: Trade
Development Board. 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
Global industrial growth Yoy%
cdxXLstatIndustrialGrowth: Global industrial growth Yoy%
hhh
-5
0
5
10
15
Jul 11 Jan 12 Jul 12 Jan 13 Jul 13
US China Europe
Global lubricating oils demand 000 t cdxXLstatSale: Global lubricating oils demand 000 t
hhh
0
250
500
750
1,000
1,250
Jul 11 Jan 12 Jul 12 Jan 13 Jul 13
US China Germany Brazil
Page 27 of 28
MARKET FUNDAMENTALS
Upcoming / recent expansions / conversions / new plants
Refiner Location Timing New capacity Grade Expansion / new plant
Sasol Louisiana, US Around 2020 NA GTL New
Petrobras Comperj, Brazil 2017 355,000 t/yr Group II New
Holly Frontier Wood Cross, US By 2016 10,000-12,000 b/d Group III New
Luberef Yanbu, Saudi Arabia 3Q 2015 715,000 t/yr Group II New
VN Oil Hiep Phuoc, Vietnam Mar 2015 50,000 t/yr Group II re-refinery New
ExxonMobil Singapore 1Q 2015 NA Group II Expansion
ExxonMobil Baytown, US 1Q 2015 NA Group II Expansion
CNOOC Taizhou, China 2015 600,000 t/yr Group II New
Panjin Northern Asphalt Liaoning, China 2015 300,000 t/yr Naphthenic base oils New
NIS, Serbia Serbia 2015 180,000 t/yr Group II/ naphthenic New
Nynas Harburg, Germany 2015 NA 350,000 t/yr naphthenic base oils Conversion/expansion
Sinopec Maoming, China By 2015 250,000 t/yr Group II Expansion
Shell/Hyundai Oilbank Daesan, South Korea 2H 2014 650,000 t/yr Group II New
SK Lubricants/Repsol Cartagena, Spain 2H 2014 630,000 t/yr Group III 3-8cst New
Heritage-Crystal Clean Indiana, US Mid-2014 25mn USG/yr Re-refined Group II light and mid-grade Expansion
Adnoc Abu Dhabi, UAE 1H 2014 620,000 t/yr 500,000 t/yr Group III, 120,000 t/yr Group II New
Heritage-Crystal Clean Indiana, US 1Q 2014 1,000 b/d Re-refined Group II l Expansion
Modrica refinery Modrica, Bosnia 2014 200,000 t/yr Group III Expansion
Puralube Troeglitz, Germany 2014 50,000 t/yr Group II New
Tatneft Nizhnekamsk, Russia 2014 200,000t /yr Group II/III New
Chevron Pascagoula, US 4Q 2013 1.25mn 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
Sinopec Yanshan, China Oct 2013 240,000 t/yr Group II 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
NexLube Tampa, US 2H 2013 1,300 b/d Group II re-refinery New
Lwart Lencois Paulista, Brazil Jan 2013 150,000 t/yr Group II re-refinery New
Naftan Novopolotsk, Belarus Nov 2012 NA Add 6,000 t/month Group III Conversion
Sinopec Jinan, China 4Q 2012 50,000 t/yr Group II and BS, from 100,000 t/yr Group I Conversion/expansion
SK Lubricants/JX Energy Ulsan, South Korea May 2012 26,000 b/d Group III New
Heritage-Crystal Clean Indiana, US 1Q 2012 30mn USG/yr Re-refined Group II light grade New
Lotos Gdansk, Poland 2H 2012 NA Add Group II Conversion
PetroChina Fushun, China 3Q 2011 NA Only heavy-grade Group I Conversion
GS Caltex Yeosu, S. Korea Jun 2011 3,000 b/d Heavy-grade Group II Expansion
CNOOC Huizhou, China May 2011 400,000 t/yr Group II New
Bapco-Neste Sitra, Bahrain 2H 2011 400,000 t/yr Group III New
HPCL Mumbai, India 2H 2011 30,000 t/yr Group II and Group III, from Group I Conversion/expansion
Shell/Qatar Petroleum Qatar 2H 2011 1.5mn t/yr GTL New
Sinopec Shanghai, China 2Q 2011 NA Add 2,000 t/month Group III Conversion
Sinopec Shanghai, China 1Q 2011 NA Group II Expansion
Hainan Handi Hainan, China 1H 2011 70,000 t/yr Group II, from 230,000 t/yr Group I Conversion/expansion
Pertamina-SK Cilacap, Indonesia NA NA 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.
Argus Base Oils
illuminating the markets
Petroleum
Issue 13-44 Friday 01 November 2013
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