Italy’s July lube demand falls

Italy’s lubricating oil demand fell in July for the third time in four months amid a slide in consumption of industry-related lubricants.

The slowdown added to a slew of signals pointing to slowing economic and industrial activity in Europe in the face of surging energy costs.

The strong consumption of passenger car engine oils (PCMO) also suggested that services sectors such as tourism helped to delay the drop in demand for some types of lubricants.

That support is likely to wane as the summer holidays draw to a close.

Italy’s total lube demand of 31,700t in July fell by 6.7pc from year-earlier levels, government data showed.

Consumption also fell in July from the month of June for the first time in five years.

Demand typically rises in July from the previous month on the back of a surge in consumption of industrial oils.

Industrial oils demand instead fell in July from the previous month for the first time in more than eight years.

Industrial oils demand also fell by 14pc in July from year-earlier levels amid shrinking consumption of lubricants like hydraulic oils and metalworking fluids.

Consumption of heavy-duty engine oils (HDEO) fell by 20pc in July and at its fastest pace in three months. HDEO is seen as a bellwether for industrial activity in view of its use in trucking fleets.

Demand is slowing as factories cut back activity in response to energy costs that they are unable to absorb.

Italy’s purchasing managers’ index for July pointed to contraction in factory activity for the first time in more than two years.

Italy’s automobile oils demand also faced growing pressure. The 1.9pc increase in consumption slowed from 3.9pc growth in June and 9.6pc in May.

Demand rose because of still-strong PCMO consumption.

The weak lube consumption complicates blenders’ typical stock replenishment plans after the summer holidays.

Forecasts of recession throughout Europe add to those complications and raise the attraction of procuring smaller volumes on a more regular basis.

The strategy would help maintain flexibility in the face of lube demand that is likely to deviate from typical trends over the coming months.