Global base oils – week Jun 20: Demand

· Global economic growth faces growing pressure as central banks raise interest rates sharply to reverse rising inflation.

· US retail sales fall in May, lag expectations.

· US’ May manufacturing output unexpectedly falls.

· Expectations of slowdown in economic activity could complicate moves to raise US lube prices.

· Latin America’s May auto sales strengthen vs April.

· Mexico’s May auto sales turn positive for first time in 9 months.

· Stock-building for emergency supply buffer during hurricane season likely to support US base oil/lube demand.

· Americas base oils demand could remain more muted amid more balanced supplies.

· Americas base oils buyers likely to continue to target Asia-Pacific supplies.

· Americas buyers facing little urgency for immediate replenishment volumes can afford to wait out the longer delivery time for supplies from Asia-Pacific.

· Europe faces pressure from rising interest rates, high inflation, supply-chain issues.

· European industrial production gets support from back-log orders. This support set to wane over coming months.

· Germany’s ZEW indicator of economic sentiment stays negative in June.

· Europe’s car sales fall in May for eleventh month in a row.

· Europe lube demand likely to face more pressure as economic activity slows, costs rise.

· European base oils demand faces seasonal slowdown.

· Weaker lube demand likely to exacerbate slowdown in base oils demand.

· Blenders’ priority of security of base oils supply likely to ease amid expectations of slower demand, improving supply.

· Rising interest rates extend to many Asia-Pacific markets.

· Wariness persists about possibility of further lockdowns in China.

· Asia-Pacific May auto sales show signs of improving.

· China’s May car sales fall much more slowly than in April.

· China’s 1H June car sales rise from year-earlier levels.

· India’s retail diesel premium to light-grade base oils narrows further.

· Indian demand for very-light grade base oils typically falls when diesel premium to light-grade base oils is narrow.

· Asia-Pacific base oils demand likely to stay steady-to-weak.

· Sufficient supply curbs Asia-Pacific buyers’ concern about covering requirements.

· Muted recovery in Chinese demand curbs any rise in competition for supplies.

· Muted recovery in Chinese demand contrasts with strong rebound in demand in 2Q 2020 after lockdowns were relaxed.