Europe’s May lube demand rises

Lubricating oil demand in Europe's four largest economies rose in May for the first time in nine months amid a pick-up in automobile oils consumption.

Total lube demand in Germany, France, Spain, and Italy combined rose to 206,370t in May, government and industry data showed.

The volume was up 5pc from year-earlier levels. It remained below May 2019 levels.

Even with the stronger demand, total consumption of 943,770t in the first five months of the year was still down 6pc from year-earlier levels.

Lube demand rose in May partly because of a low comparison level the same time a year earlier, when Covid-19 restrictions continued to cap consumption.

Blenders also faced growing resistance from rising lube prices in first-half 2021.

Demand got a boost from a strong rise in consumption of automobile lubricants. Demand for these lubricants rose by 14pc in May in Germany, Italy and France combined.

The stronger auto lube consumption coincided with a pick-up in travel activity following the relaxation of pandemic restrictions earlier in the year. A revival in tourism activity added to the recovery in the services sector.

Stronger auto lube demand contrasted with more mixed industrial oil consumption. Demand fell in Italy and Germany but rose in France.

Consumption of industrial oils are likely to face growing pressure as European manufacturing activity slows in response to weaker demand and rising costs.

The seasonal rise in lube consumption in May coincided with tighter-than-expected base oil supplies in Europe.

Base oils prices rose more steeply than crude and diesel in response to the tight supply-demand fundamentals, especially in March and April.

The pace of the price increase slowed in May and June as demand began to ease.