Italy’s June Lubricants Demand Dips, Europe Runs Down Inventories

Italy's lubricants demand fell in June as European blenders worked down inventories built during the spring supply disruptions, pointing to a broader slowdown across the region.

Italy's lubricants demand fell 10% year on year to 30,700 tonnes in June, Ministry of Environment and Energy Security data showed.

It was the second straight annual decline after 11 consecutive months of growth through April, leaving quarterly demand in the three months to June below year-earlier levels for the first time since early 2025.

The June decline continued reversing the surge in buying seen during March and April, when blenders increased purchases amid concerns over higher prices and security of supply following disruptions across the Middle East.

Italy regularly provides Europe’s earliest demand signal, with its data published weeks ahead of most other major markets.

Poland also reported weaker lubricants consumption in June, while Spain, Portugal, and Belgium all weakened in May, suggesting the inventory rebuild was reversing across the region rather than only in Italy.

Key Highlights

·         Automotive lubricants demand fell 5% as passenger car motor oils weakened.

·         Industrial lubricants demand dropped more sharply, led by lower process oils consumption.

·         First-half lubricants demand still rose 3% year on year despite the May and June correction.

·         Spain's lubricants demand fell 4% in May to 36,700 tonnes, Portugal's fell 3%, and Belgium also reported weaker consumption, with all three markets reversing double-digit growth in March and April.

·         Poland's demand fell in June for a second straight month, extending May's decline.

Market Repercussions

European blenders spent March and April building stocks against fears of a supply squeeze. By May and June, they were selling those same stocks back down.

The drawdown took place as blenders balanced ongoing supply constraints against the cost of holding inventories procured at elevated prices.

Lower crude oil prices, sufficient availability of Group I and Group II base oils and a seasonal slowdown in demand during the summer gave blenders reason to delay fresh purchases as they worked through stock bought at higher prices earlier in the year.

The same caution extended into trade flows, with Saudi Arabia's Red Sea exports to Europe pausing in June after unusually heavy deliveries during the previous three months.

Underlying lubricants demand remained relatively stable over the first half of the year. What changed was predictability, with more erratic buying patterns harder to manage than the underlying demand shift itself, even before accounting for continued uncertainty over Middle East flows and crude prices.