Global base oils – week of Nov 14: Demand outlook

·        Buyers face prospect of managing seasonal and economic slowdown simultaneously.

·        Uncertainty/weak demand boosts attraction of procuring smaller volumes, paying premium for smaller volumes to limit exposure.

·        US dollar weakens after lower-than-expected US inflation in October.

·        Weaker US dollar and possibility of smaller-than-expected rise in interest rates raise prospect of firmer commodities prices, reviving inflation pressures.

·        US weekly gasoline demand falls last week for 32^nd straight week.

·        Blenders, refiners likely to focus on working down stocks as end-user demand slows at year-end.

·        Brazil’s October auto sales rise for fourth month, share of diesel/mogas-powered vehicles falls.

·        Brazil’s demand for overseas base oils supplies likely to remain steady amid more balanced domestic supply.

·        Firm Americas lube demand contrasts with sustained drop in European demand.

·        European Commission expects Eurozone inflation to last for longer, economy to contract in Q4 2022 and Q1 2023.

·        UK’s economy already contracts in Q3, likely starting prolonged recession.

·        UK faces prospect of higher taxes to plug hole in public finances, adding to pressure on economic growth.

·        Signs of reviving base oils demand in Nigeria as shipments from Europe, US head for West Africa.

·        Asia-Pacific lube demand mixed – firm in southeast Asia, India, weak in China.

·        Buyers likely to rely on term supplies, limit stock building until comfortable prices have bottomed out.

·        Seasonal rise in Chinese demand in recent months more muted than usual.

·        China’s low base oils supply would struggle to cover a sudden pick-up in demand.

·        China’s relaxation of Covid-19 restrictions raises expectation of pick-up in economic activity.

·        Relaxation of restrictions coincides with surge in Covid cases in China.

·        Chinese blenders likely to remain cautious because of concern about more lockdowns and until pick-up in activity materializes.

·        China’s October base oils imports likely stayed relatively low.

·        China’s low October base oils output, low imports highlight muted seasonal pick-up in demand.

·        Chinese blenders show signs of holding off pre-lunar new year stock replenishment until early next year.

·        Trend raises prospect of seasonal rise in demand during smaller time period.

·        China’s car sales show signs of slipping in early November from year-earlier levels.

·        Philippines’ Q3 economic growth exceeds expectations on strong household consumption.

·        Trend highlights strong economic performance of southeast Asian markets.

·        India’s October lube demand rises to seven-month high, falls from year-earlier levels.

·        India’s strong lube consumption likely to boost demand for domestic/overseas base oils.

·        India’s October automobile sales rise strongly as festival season boosts demand.

·        India’s October car, tractor, two-wheeler, commercial vehicle sales exceed October 2019 levels.

·        India’s demand for very light grade base oils likely to stay muted.