Global base oils–week of Jul 11: Demand

· Key global central banks focus on taming inflation by raising interest rates.

· US faces prospect of more marked economic slowdown later this year.

· Unusually strong US dollar squeezes competitiveness of US exports.

· US’ June auto sales fall for 11^th straight month amid ongoing supply shortages.

· Argentina’s June auto sales extend rise, Brazil sales fall slightly.

· US/Americas lube demand likely to hold firm for now.

· Prospect of sharper US economic slowdown in Q4 would coincide with seasonal drop in lube demand.

· US base oils demand to get support from steady lube consumption, concern about supply disruptions during hurricane season.

· Americas base oils demand likely to hold steady; balanced fundamentals curb urgency to replenish stocks.

· Overseas demand for US base oil supplies faces prospect of easing on weaker consumption, improving supply.

· Weak consumer sentiment, high inflation, concern about stable energy supply in Q4 2022 keep pressure on Europe economic outlook.

· Growing number of European countries face prospect of contraction or recession.

· Some countries likely to get temporary boost from tourism sector during summer months.

· UK’s June car sales fall for 4^th month, worst performance for month of June since 1996.

· Softer lube demand as Europe economies slow set to combine with seasonal slowdown in lube consumption during summer months.

· Easing concern about insufficient supply / higher prices likely to dampen blenders’ urgency to lock in supplies, adding to pressure on demand.

· Asia-Pacific economic outlook stays more mixed, firmer than Europe.

· Some countries face growing pressure to raise interest rates to dampen rising inflation.

· China likely to boost infrastructure investment to support economic growth after Q2 slowdown.

· China auto sales to get boost from more government stimulus measures.

· China’s June auto sales already rebound more than 20pc yoy, more than 40pc mom, boosted by relaxation of lockdown measures and lower auto purchase tax.

· Uncertainty about extent/timing of future Covid-19 flare-ups likely to dampen Chinese blenders’ willingness to build stocks.

· Easing congestion in Chinese ports raise prospect of further drop in freight rates.

· India’s auto sales rise 27pc yoy, 56pc vs June 2020, fall 9pc vs June 2019.

· India’s passenger vehicle, tractor, commercial vehicle sales rise in June 2022 vs June 2019.

· Strong passenger vehicle sales in India point to easing of supply component constraints.

· Strong bookings for new vehicle launches in India point to healthy demand.

· Stabilisation of demand in rural India would leave auto sales outlook well placed ahead of festive season in Q4 2022.

· India retail diesel price premium to light-grade base oil prices stays unusually narrow.

· India’s demand for light-grade base oils typically lower when premium is narrow.