France’s January lube demand rises

France’s lubricating oil demand rose to a three-month high in January, mirroring a similar seasonal pick-up in consumption in markets like Spain and Italy.

The recovery was relative. It mostly reflected the unusually low comparison with December following the slump in regional lube demand at the end of last year.

Outright consumption remained unusually low amid flatlining economic growth.

Weak demand prolonged lube blenders’ existing feedstock inventories.

Concern that demand would stay weak incentivized them to delay replenishment plans or to procure smaller volumes.

The demand weakness complicated regional refiners’ ability to clear surplus base oils supplies. The trend magnified the impact of the supplies on regional base oils prices, which extended their fall.

Blenders showed signs of continuing to maintain lower-than-usual base oils inventories even ahead of a seasonal pick-up in lube consumption over the coming months.

France’s lube demand of just over 42,000t in January rose from around 38,300t in December and by 2pc from year-earlier levels, according to Centre Professionel des Lubrifiants (CPL).

The year-on-year increase was the first in eight months and mostly reflected lower-than-usual demand in January 2022, when the Omicron virus was spreading throughout the country.

France’s lube demand unusually fell in January 2022 from the previous month. Consumption typically rebounds strongly in January from the month of December.

The country’s lube demand in January this year got a boost from a 4pc rise in consumption of industrial oils.

The pick-up in consumption mirrored an improvement in France’s manufacturing purchasing managers’ index (PMI) in January to a five-month high, to a level that indicated expansion.

The PMI index then fell back sharply in February.

Demand for automobile lubricants rose by 2pc in January on the back of rising consumption of passenger car motor oils (PCMO).

PCMO demand is more reflective of the state of the services sector.

France’s services PMI was steady in January at a level that pointed to contraction. It then rebounded strongly in February.