Global base oils–week of Jul 25: Demand

· Lower crude oil prices likely to prompt buyers to hold back.

· Seasonal slowdown in demand gives buyers leverage to hold back.

· US Fed set to raise interest rates sharply this week to tame high inflation.

· US July PMI falls more than expected, services sector contracts.

· US leading economic index falls in July for fourth month, with recession seen around year-end.

· US gasoline demand over past month unusually low for time of year, suggesting high prices impacting consumption.

· US blenders likely to face more resistance from end-users to high prices after fall in crude/diesel prices.

· US base oils demand faces prospect of easing overseas demand as Europe supply tightness eases, Asia surplus builds.

· US base oils demand likely to get steady support from domestic market ahead of/during peak hurricane season.

· Americas lube demand shows signs of softening.

· European central bank raises interest rates more than expected.

· Eurozone manufacturing purchasing managers index contracts in July, lowest in 25 months.

· Eurozone services PMI drops to 15-month low.

· UK consumer confidence stays at record low in July, June retail sales slide.

· Europe lube demand gets boost from rise in tourism activity.

· Europe’s industrial lube demand faces more pressure on seasonal, economic slowdown.

· Asia Development Bank lowers region’s 2022 growth forecasts, raises inflation forecasts.

· ADB raises slightly southeast Asia’s 2022 growth forecast as easing pandemic restrictions boost domestic demand.

· Japan’s July manufacturing PMI softens to 10-month low.

· China’s auto sales rise yoy in 1H July, fall vs 1H June.

· China’s auto production seen returning to normal in July.

· Chinese base oils demand stays muted.

· Persistent new Covid cases in China complicate base oil procurement plans amid uncertainty about demand.

· India’s base oils demand during monsoon season is changeable.

· Demand has previously been strong during monsoon season when prices were deemed attractive.

· Monsoon season typically deemed reason to hold off buying when prices deemed unattractive.

· Monsoon season deemed factor impacting Indian demand this year.

· Many August-loading cargoes would reach India in 2H September/early October, when blenders typically seek to replenish stocks.

· Any lack of Indian demand for August cargoes would come at a time when demand should be stronger.

· Indian demand for very light grade base oils likely to remain muted.