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India's base oils and lubricants demand fell in June despite record vehicle sales and firm industrial growth
Improving supply, lower prices and easing disruption concerns encouraged buyers to work down inventories rather than replenish stocks
The slowdown pointed to buying driven by inventory management rather than underlying consumption
India's base oils and lubricants demand fell in June despite record vehicle sales and firm industrial growth, pointing to buyers working down inventories as supply improved and prices weakened.
Base oils and lubricants consumption fell 6% from a year earlier to 371,000 tonnes, Ministry of Petroleum and Natural Gas data showed.
Second-quarter demand slipped to 1.11 million tonnes, down from 1.27 million tonnes in the first quarter and the lowest quarterly total since the fourth quarter of 2024.
The decline contrasted with strengthening economic indicators. Industrial production rose in May at its fastest pace of the year, while June vehicle sales reached a record for the month as every major vehicle segment posted year-on-year growth.
The disconnect pointed to procurement behaviour rather than underlying consumption as end-users worked through inventories built during the disruption period.
Key Highlights
· June demand fell for the third time in four months despite firm industrial activity and record June vehicle sales.
· Passenger vehicle sales recorded their strongest June on record, supported by robust demand in both rural and urban markets.
· CFR India base oils prices remained unusually weak relative to FOB US and FOB Asia prices, pointing to a lack of urgency to secure additional supplies.
· Asia's base oils exports to India fell to a 23-month low in May, while Singapore shipments remained unusually weak through June.
Market Repercussions
The slowdown pointed to a market still drawing down disruption-driven stocks rather than restocking.
Improving supply, easing disruption concerns and lower prices added to the incentive for lubricant blenders and downstream consumers to work down existing stocks first before seeking replenishment supplies.
A weak start to the monsoon season gave buyers another reason to hold back.
Base oils procurement typically begins to revive in August as buyers lock in shipments for delivery in time for the festive season starting at the end of the third quarter.
CFR India prices holding below FOB Asia levels into July pointed to buyers continuing to focus on existing stocks rather than securing additional overseas cargoes.
