Global base oils – week of Oct 24: Demand outlook

·        US economy to face growing pressure as interest rates rise.

·        Strong US dollar compounds inflation pressures in overseas markets, adds pressure on those markets to raise interest rates.

·        US gasoline demand falls for 29^th straight week.

·        Expectations of healthy base oils availability curb buyers’ urgency to lock in supplies.

·        Expectations of healthy availability and weaker demand incentivize buyers to procure smaller volumes.

·        Weaker demand curbs impact of US plant maintenance work.

·        No Atlantic hurricane/storm forecast over coming days, as peak season draws to close.

·        Brazil’s September lube demand falls for fourth month even as auto sales rise.

·        Brazil’s lube demand slows throughout most of year even amid steady economic growth.

·        Weaker Latin American lube demand boosts attraction of procuring smaller volumes for more prompt delivery to limit time-risk exposure.

·        Asia-Pacific prices remain unusually competitive vs US prices, sustaining interest in arbitrage shipments.

·        Wave of arbitrage shipments set off from South Korea for Latin America in September.

·        European central bank expected to raise interest rates another 0.75pc this week to curb inflation, even as economy slows.

·        Slowing European lube demand as economies slow give indication of challenge US blenders likely to face as US economy slows.

·        France’s August lube demand falls for third time in four months, even with support from services sector.

·        Spain’s August lube demand sees seasonal slowdown, unusually low for month of August.

·        Italy’s September lube demand falls on sustained slide in industrial oils consumption.

·        UK’s firm August base oils imports suggest premium grades account for rising share of consumption.

·        European demand for Russian supplies holds steady at lower levels. Buyers will need to find alternatives to those volumes in coming months.

·        Weaker European demand frees up more regional base oils supplies for Africa.

·        West Africa demand for US supplies likely to wane as buyers cover more requirements with European supplies.

·        Asia base oils/lube demand stays mixed, faces growing pressure from rising interest rates, weak overseas growth.

·        Japan’s October manufacturing activity growth falls to 21-month low.

·        China’s September industrial production rises more than expected.

·        China’s September retail sales rise more slowly – highlighting mixed economic performance amid ongoing Covid restrictions.

·        China’s September base oils imports show signs of recovery.

·        Chinese base oils buyers stay cautious amid ongoing zero-Covid policy.

·        China’s car sales fall in 1H October year on year as Covid lockdowns dampen demand.

·        India’s base oils demand likely to hold firm amid firm domestic lube consumption, slower imports in recent months.

·        Demand likely to increase when buyers comfortable prices have bottomed out.

·        Recent base oils price volatility incentivizes buyers to pause until there are more signs prices have bottomed out.

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