Global base oils - week of Jul 4: Demand

· Expectations of economic recession/slowdown increase globally.

· US’ June consumer confidence falls more than expected amid growing pessimism about outlook.

· US consumer spending contracts in May, weaker than assumed in first four months of year.

· US June PMI falls to lowest since July 2020.

· US implied gasoline demand starts to lag five-year average, suggesting high prices are impacting consumption.

· US lube demand holding firm for now, likely to face pressure as economic activity slows.

· Latin Americas lube demand holds firm in May.

· Brazil, Argentina May lube demand, base oil imports rise.

· Firm lube demand mirrors southeast Asia, contrasts with Europe.

· Eurozone economic sentiment indicator falls in June on rising inflation, war in Ukraine concerns.

· Eurozone June inflation rises to record high.

· Higher-than-expected inflation raises prospect of steeper rise in interest rates.

· Eurozone manufacturing PMI in June falls to lowest since August 2020.

· France’s June car sales fall for 13^th straight month.

· Europe lube demand likely to weaken on seasonal slowdown, weaker consumer demand.

· Weaker lube demand likely to increase resistance to higher prices, cut feedstock requirements.

· Prospect of economic slowdown increases need to manage lube inventories carefully.

· European base oils demand likely to face pressure as lube consumption slows, supply tightness eases.

· Prospect of slowdown in base oils demand could dampen interest in arbitrage cargoes from Asia-Pacific.

· Prospect of easing supply tightness in Europe could add to hesitation over procuring arbitrage supplies that would only arrive in several months’ time.

· Prospect of slowdown in demand could boost interest in smaller-volume supplies with more prompt delivery times.

· Any slowdown in European base oils demand would boost opportunities for other outlets like Africa.

· Asia-Pacific economies face pressure from rising costs, higher interest rates.

· Japan’s May industrial production slumps, Tankan survey result dips.

· China’s Caixin PMI rebounds in June following easing of lockdown restrictions.

· China’s June auto sales likely rose more than 25pc yoy on easing restrictions, government stimulus.

· Monsoon rains in India extend to Delhi.

· India monsoon rains 6pc below normal in June.

· India retail diesel prices remain unusually low relative to light-grade base oils.

· Demand for light grades typically slows when retail diesel prices remain low.

· Lube demand in Thailand typically slows in Q3 versus Q2.

· Lube demand in China expected to get boost from relaxation of lockdown restrictions, government stimulus measures.

· Any rise in demand relatively muted so far, especially vs similar scenario in 1H 2020.

· Asia-Pacific base oils demand likely to get continued support from buyers in more distant markets.

· Base oils demand likely to get less support from more regional buyers.

· Term supplies more likely to cover requirements, curbing demand for additional supplies.