Imports fall to five-month low
Domestic light-grade prices hold firm despite lower demand
Dynamic suggests inventory management is key factor for slowdown
China’s base oils demand fell in October, ending a three-month recovery streak, as imports dipped to a five-month low.
Domestic Group II light-grade base oils prices held firm versus diesel and FOB Asia cargo prices despite the slowdown in demand, indicating ongoing supply requirements from domestic and overseas refiners.
The mixed signals suggest the drop in consumption in October could have been driven by inventory trimming, even as underlying demand remained steady.
Total demand — combining domestic output and net imports — dropped to less than 533,000 tonnes in October, government and industry data showed.
Demand fell by 8% from the previous month, mirroring a typical pattern of consumption slowing in the month of October from September.
Demand fell by 10% from year-earlier levels, when consumption was unusually high for the month of October.
The contraction followed a 6% rise in consumption in the third quarter of the year.
That higher consumption, and still-strong domestic Group II light-grade prices during the fourth quarter, suggested that stock management was a key driver behind October’s slowdown.