Asia demand set for slowdown during winter months
Weaker demand gives buyers leverage to hold back
Weaker demand likely to coincide with improving supply
Asia’s lube demand is likely to slip in the coming months amid a seasonal slowdown in consumption during winter.
The region’s lube demand is likely to slip to less than 2.45 million tonnes in the fourth quarter of the year, according to the Base Oil News short-term outlook.
Demand is then likely to move closer to 2.50 million tonnes in the first three months of next year.
The volume excludes China.
Asia’s lube consumption of more than 2.52 million tonnes in the third quarter of this year rose by more than 10% from year-earlier levels.
The volume was still down from more than 2.55 million tonnes in the three months to end-June.
Weaker demand in the coming months would give buyers more leverage to hold back in the face of lower base oils prices and healthy availability of supply.
Supply could remain readily available amid a relatively light round of scheduled plant-maintenance work over the coming months.
The start-up of new production capacity in the region in recent and in coming months is likely to add further to supply.
Weaker demand, healthy availability of supply and squeezed base oils margins could increase pressure on refiners to adjust output to maintain more balanced fundamentals and ease pressure on prices.