Base oils in Russia are getting cheaper due to falling demand amid sanctions
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Oversupply and weakening demand in the domestic market, along with a decrease in exports due to anti-Russian sanctions, have led to lower prices for base oils in Russia, according to an Argus review dated August 24 (available from Vedomosti).
The review notes that due to sanctions, the export of lubricants from Russia in July 2022 decreased by 7% compared to June to 69,400 tons. “This is 31.8%, or 32,400 tons, lower than in February, before the imposition of sanctions,” analysts point out. Deliveries through the Baltic ports – the main channel for the export of oils from Russia – in July amounted to only 16,400 tons, which is 51% less than the February volume. Railway shipments of base and finished oils to Russian buyers, on the contrary, increased by 18% compared to June and by 21% compared to February to 123,200 tons, according to forwarders.
Oversupply in the domestic market put pressure on prices. According to traders cited by Argus, industrial oils of grades I-20 and I-40 produced by the Novoufimsk, Novokuibyshevsk and Angarsk refineries with delivery in August could be purchased in the range of 75,000–76,000 rubles. per 1 ton on the FCA basis, which is about 6%, or 5,000 rubles, lower than the July prices. The August batches of I-20s from the Yaroslavl and Omsk refineries were more expensive, about 79,000–80,000 rubles. per 1 ton due to the limited supply of this product on the spot market, follows from the report. More viscous brands of oils from these factories were offered at a discount to I-20: Yaroslavl oil I-40 – at 75,000–76,000 per 1 ton, I-50 – about 78,000 rubles. for 1 ton
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