Demand jumped to a four-year high as buyers accelerated stockbuilding ahead of expected supply disruptions
Southeast Asia’s lubricants and base oils consumption strengthened sharply, while Asia’s exports to the region lagged demand for a third straight month
The persistent supply shortfall pointed to growing difficulty keeping pace with demand ahead of second-quarter disruptions
Thailand’s lubricants demand rose in March for the first time in six months to a four-year high, joining a broader rebound across Asia as buyers accelerated procurement ahead of expected supply disruptions.
Total lubricants demand rose to 52,000 kilolitres (46,000 tonnes) in March, up 24% year on year and matching the highest level since March 2022, Ministry of Energy data showed.
Thailand’s lubricants consumption typically peaks in the month of March as blenders build stocks ahead of April holidays.
Weaker consumption in recent months pointed to a more subdued seasonal recovery this year.
Demand instead surged as concerns over coming supply disruptions incentivised buyers to secure additional volumes earlier than usual.
Key Highlights
· Demand rose 35% from February, the largest February-to-March increase since March 2022.
· Engine oils consumption climbed 29% year on year, reversing a 21% slide the previous month and outpacing the rebound in industrial oils demand.
· The Philippines’ March base oils and lubricants imports rose 7% year on year after sliding in three of the previous four months.
· Southeast Asia’s total consumption rose to the highest since January and the second-highest monthly volume on record.
· Regional demand exceeded Asia base oils exports to Southeast Asia for a third straight month and by the largest volume in almost six years.
Market Repercussions
The synchronised rise in lubricants demand across Asia left the region with a larger inventory buffer against immediate supply disruptions and raised the prospect of a slowdown in requirements at the start of the second quarter.
But the persistent shortfall between Asia’s base oils exports and Southeast Asia’s consumption pointed to ongoing tightness even before supply disruptions took hold.
The tightness added to the challenge regional refiners faced in covering the unexpectedly strong demand and magnified the impact of subsequent supply disruptions.
That difficulty was likely to intensify in the second quarter as refiners adjusted operations in response to disrupted feedstock supplies and a focus on maximising motor fuels output.
The tighter balance was likely to become more apparent when blenders returned to the market for replenishment volumes later in the second quarter.