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Italy’s lubricants demand fell for a fourth straight month in August, with the spring stock-building gains now largely erased
Demand also fell in Poland, Belgium, Spain and Portugal, extending a slowdown across much of Europe
Lean stocks could leave blenders exposed if September's seasonal recovery proves stronger than expected or supply tightens further
Italy’s lubricants demand fell for a fourth straight month in August, encouraging blenders to keep inventories lean as European supplies of premium-grade base oils remain tight.
Demand fell 8% year on year to 21,200 tonnes, the lowest August total since 2021, Ministry of Environment and Energy Security data showed.
The decline all but erased the gains from a spring buying surge, when buyers built stocks against supply disruptions and higher prices. Year-to-date demand now stands barely above last year's level, close to the pace seen before that surge.
Another fall in September would signal a shrinking market rather than a flat one.
The slowdown extended beyond Italy, with demand also falling in Poland, Belgium, Spain and Portugal.
Weaker demand would normally leave Europe with a larger supply build over the summer. This year, that build looks set to be smaller. Group III shipments have slumped, US cargoes to Europe slowed in July and strong diesel economics are encouraging refiners to prioritise motor fuels.
Key Highlights
Italy’s lubricants demand in the first eight months of the year rose 0.4% year on year to 256,000 tonnes, slowing from 8% growth in the first four months.
Automotive lubricants demand fell 12% year on year, a third straight monthly decline, on weaker demand for passenger car and heavy-duty engine oils.
Industrial oils demand fell 4%, a fourth straight monthly decline, though the drop eased from more than 13% in June and July.
Poland's lubricants demand fell 11% year on year in August, its fourth decline in five months.
Belgium's demand fell 5%, a fourth straight monthly decline.
Spain's lubricants demand fell 15% year on year to 34,700 tonnes in July, a third straight monthly decline.
Market Repercussions
Lean stocks and a smaller summer build leave blenders with less cover as demand recovers from its seasonal August low.
September has brought further strain. Group III maintenance in Europe and Asia cut into supply, while base oils shipments from Saudi Arabia to Europe slowed sharply ahead of maintenance work at its Yanbu plant in October.
An outage on Saudi Arabia's East-West pipeline has also disrupted crude flows to Europe, adding another constraint to regional refinery supply.
Lower stocks leave blenders more exposed to a stronger-than-expected recovery in demand or another supply disruption.
