India’s lube demand rose in January for the fifth time in six months and at its fastest pace since the first half of last year.Rising consumption kept pressure on blenders to procure sufficient volumes of base oils feedstock supplies to cover domestic requirements.It also complicated their moves to build additional stocks in preparation for a seasonal boost in consumption at the end of the first quarter of the year.Lube consumption of 398,000 tonnes in January rose by 21% from year-earlier levels to a seven-month high, government data showed.Consumption typically rises even higher in the month of March, as blenders seek to maximise sales before the end of the financial year at end-March.The sustained rise in India’s lube consumption coincided with a pick-up in automobile sales last month and signs of steadier industrial production growth after a slowdown in the third quarter of last year.Those factors, combined with lower interest rates and expectations of steady economic growth over the coming year, raised the prospect of lube consumption holding firm or extending its rise.The rise in India’s lube demand last year contrasted with steady base oils supply.The diverging trends left stocks increasingly tight and increased buyers’ reliance on supplies from overseas markets.A further rise in lube demand this year could repeat that trend, especially in the first few months of the year before the start-up of new base oils production capacity in India.Scheduled maintenance work at several base oils plants in India in the first quarter of the year could exacerbate the squeeze on supply.Such a scenario would increase buyers’ reliance on base oil imports to cover demand.Any such rise in requirements for overseas supplies could be more challenging after India’s imported Group II base oils cargo prices weakened relative to FOB Asia prices in the first few weeks of the year.The narrower CFR India base oil premium to FOB Asia prices complicated the arbitrage to move more supplies to India..India’s Dec base oil supply lags demand.India’s December base oils imports slip
