Spain’s January lube demand rises

Spain’s lubricating oil demand rose in January following a seasonal slowdown in consumption at the end of last year.

The rise in demand from December mirrored a similar trend in markets like Italy.

Firmer demand contrasted with signs of blenders holding off moves to replenish base feedstock supplies at the start of the year.

An ongoing fall in regional base oils prices, sliding lube demand from year-earlier levels and concern about economic growth incentivized blenders to delay replenishment plans.

It also left blenders tapping existing base oils supplies to meet the rise in finished lube consumption from December.

Spain’s lube consumption typically extends its seasonal recovery through the rest of the first quarter of the year.

A repeat of that trend this year would leave blenders with increasingly depleted base oils stocks as they pushed back their replenishment plans.

An extension of the trend throughout Europe would leave blenders needing to replenish low stocks at around the same time late in the first quarter or early in the second quarter of the year.

Moves to replenish stocks would follow refiners’ removal of lingering surplus base oils supplies through lower production or arbitrage shipments to markets like Mideast Gulf or Latin America.

Regional base oils prices reflected the extended demand weakness during the first two months of the year. They have yet to reflect a pick-up in demand or more balanced supplies.

Spain’s lubricating oil consumption of close to 31,500t in January rose by 17pc from less than 27,000t the previous month, according to CORES, which tracks the country's energy stocks.

The rise in demand from December was typical. The strength of the rise in demand from December was firmer than usual.

Lube consumption fell by 5pc from year-earlier levels and for the sixth time in seven months.

Blenders remained more focused on that trend.