India’s Jan lube demand holds firm

India’s lubricating oil demand held unusually firm in January as strong economic growth boosted everything from industrial production to auto sales.

Demand is likely to continue to rise over the coming months, with India’s economy forecast to extend its strong growth over the coming year.

India’s strong lube demand over the past year coincided with weak lube consumption in Europe and a slump in demand in China.

Strong lube demand over the coming year is likely to coincide with a recovery in Chinese demand.

The trend raised the prospect of the diversion of more overseas base oils shipments to China rather than to India.

Such a move would widen further the shortfall of the country’s base oils supplies versus its domestic demand.

The planned start-up of new base oils production capacity in India later in 2023 would help to ease that shortfall.

Until then, strong domestic lube consumption is likely to increase requirements for overseas base oils supplies.

Lube demand of 417,000t in January rose by 32pc from year earlier levels and was down only slightly from 424,000t the previous month, government data showed.

The December volume had been the highest in nine months. The January volume was the second highest.

Lube consumption held above the 400,000t level in January for a fourth straight month.

Before October, it took twenty-two months for lube demand to exceed that level four times.

Demand got support from strong industrial and services activity even in the face of high inflation and rising interest rates.

India’s automobile sales rose in January for the fifth time in six months. Diesel consumption rose for an eleventh month.

India’s government forecast economic growth of 7pc in the year to end-March and 6.4pc growth the following year.

Strong lube demand contrasted with a sustained slide in the country’s base oils imports.

Imports showed signs of edging up in January from a 31-month low in December. But they remained unusually low.