Global base oils – week of Sep 26: Demand outlook

·        Global economies face prospect of sharper slowdown as interest rates rise.

·        Oil prices face pressure from expectations of lower demand as economies slow.

·        US economy faces higher recession risk on signs interest rates to keep rising sharply until growth slows/inflation falls.

·        US economic activity holds firm - US Composite flash PMI for September improves to three-month high, points to slower rate of decline.

·        Strong US dollar adds to costs for overseas buyers in local currency terms.

·        US gasoline demand fell last week for 24th straight week to lowest since February.

·        Easing additives tightness could boost lubricants production, spur demand for Group III base oils.

·        Tropical Storm Ian gains strength in Caribbean Sea, heading towards Cuba then Florida.

·        Atlantic hurricane activity has been unusually light so far as season heads into final month.

·        Lower US base oils posted prices could spur demand, or could prompt buyers to hold back until they are comfortable they face less additional exposure to lower prices.

·        Latin American buyers likely to continue to target persistent surplus supplies from Asia-Pacific.

·        Brazil’s lube demand slowdown gathers pace in August.

·        Arbitrage shipments from Asia, slower end-user demand could impact Latin American demand for US supplies.

·        Slowdown in European economic activity gathers pace.

·        Eurozone consumer confidence slumps in September to record low.

·        Eurozone’s flash PMI for September contracts further to lowest since early 2021.

·        France business climate in September falls to weakest in more than a year.

·        UK currency depreciation, prospect of even higher interest rates, add to importers’ costs.

·        France, Spain July lube demand falls even with support of tourist season.

·        Prospect of slower lube demand likely to boost attraction for blenders to procure smaller volumes on more frequent basis.

·        Concern that base oils prices could fall further likely to add to preference to manage stocks carefully/procure smaller volumes.

·        Expectations that Asia-Pacific base oils prices face less exposure to lower prices likely to support firmer demand.

·        Lower crude/diesel prices could prompt buyers to hold back, especially if steadier base oils prices incentivize producers to increase production.

·        China’s base oils demand extends slide in August.

·        Chinese base oils demand typically rises in lead-up to week-long holiday at start of October.

·        China’s rise in demand at end of Q3/early Q4 more muted than usual.

·        China’s car sales rise in first three weeks of September year on year, fall from August.

·        Uncertainty about timing/location of additional lockdowns in China boosts attraction of procuring smaller volumes, keeping lean stocks.

·        Upcoming closure of base oils plant in Japan likely to spur demand for alternative supply sources.

·        India’s seasonal rise in base oils demand ahead of festival season likely to be stronger amid firm end-user demand.

·        India monsoon season nearing end, yet to withdraw.

·        Indian demand for very-light grade base oils likely to remain muted.