Global base oils – week May 23: Demand

· More signs of economic slowdown, especially in Europe, China.

· Supply chain issues, sliding consumer confidence, rising interest rates/inflation raise expectations of recession in some markets, slowdown in all markets.

· Europe’s car sales fall in April to second lowest on record for month of April. Lowest was April 2020, in midst of Covid-19 lockdowns.

· EU’s consumer confidence indicator for May falls even further to second lowest in at least 15 years. Lowest was early 2020, during lockdowns.

· UK’s consumer confidence barometer falls in May to record low.

· China’s car sales fall more than 20pc year on year in 1H May. But they rise more than 25pc month on month.

· Signs of ongoing demand weakness even in regions of China with fewer lockdown restrictions.

· Even with easing of lockdowns in some parts of China, zero-Covid policy maintains possibility of further lockdowns over coming months, and in Beijing now.

· China’s typical seasonal rise in demand in Q1-2 delayed, likely to be pushed into Q3, repeating pattern of 2020.

· Slowing economic/industrial activity cuts lube/base oils demand. Slowdown limits room for blenders to pass on rising feedstock costs to consumers.

· Lube demand destruction continues to lag drop in base oil supply, especially in Europe.

· Spain’s lube demand slows in March for second month.

· Europe/US base oils demand stays firm.

· Asia-Pacific/Chinese base oils demand more mixed.

· South Korea’s April base oil imports rise to nine-month high ahead of/during plant maintenance.

· Taiwan’s April base oil imports fall to 16-month low even as domestic supply dips.