Global base oils – week May 30: Demand

· US consumer demand holding firm.

· Base oils demand holds firm in US.

· US hurricane season expected to be more active than usual.

· Higher prospect of weather-related supply disruptions add to US buyers’ incentive to secure additional supplies as buffer.

· Brazil’s April lube demand steadies, holding firm.

· Latin America buyers likely to continue to target lower-priced supplies from Asia-Pacific.

· Consumer confidence/services sector in some European economies benefit from post-Omicron pent-up demand bounce, upcoming tourism season.

· Manufacturing output in Europe grows more slowly, facing pressure from supply-chain delays and rising costs.

· Europe lube demand mostly weaker.

· Italy’s April auto lube demand falls for first time this year; industrial lube demand extends drop.

· Spain’s March lube demand falls for second month.

· Austria’s March lube demand falls.

· France’s lube demand rises in March for first time this year.

· Base oils demand steady in Europe, even with mixed lube demand.

· Mixed lube demand, prospect of seasonal slowdown from start of Q3 boosts attraction for European buyers to hold back.

· Overseas buyers that procure from Europe incentivized to source supplies from Asia-Pacific.

· China’s economy set to get boost from relaxation of lockdowns in key population/production centres.

· China’s auto sales gather pace steadily throughout May.

· China's auto sales up more than 30pc in first three weeks of May vs same period in April; contraction slows vs year-earlier levels.

· Rebound in China’s lube demand likely to be less strong than in Q2-Q3 2020 amid pressure from higher prices, closed arbitrage to China, supply-chain bottlenecks, concern about further lockdowns.

· Base oils demand remains weaker in Asia amid resistance to high prices – even though they are lower than prices in other regions.

· Weaker demand coincides with lower retail diesel prices in India.

· Base oils demand in China could get support from stock-replenishment. Domestic prices would need to rise sharply to attract supplies.

· Typical seasonal slowdown in demand in Asia in Q3 likely to be distorted by firmer Chinese demand.

· Any easing of logistical bottlenecks in China could facilitate arbitrage shipments to other regions by cutting pressure on freight rates / boosting freight availability.