Global base oils – week May 9: Demand

· High energy prices, Ukraine war, China lockdowns, supply-chain bottlenecks weigh on economic growth.

· Global economic growth slows in April to slowest since Q2 2020.

· Brazil and India see stronger growth in April.

· Germany’s industrial orders, industrial production fall in March.

· UK car sales fall 16pc in April yoy.

· UK’s 2022 car sales forecast cut by 9pc amid shortage of parts.

· France’s April car sales fall in April for 11th straight month.

· Diverging lube demand growth between Europe and Brazil/India mirrors relative economic performance of those different regions.

· Relaxation of Covid-19 containment measures boost services sector.

· Stricter Covid-19 measures in China have opposite effect - China’s April services PMI falls to second-lowest since 2005.

· Global manufacturing and services input costs rise at highest rate since 2008.

· Blenders’ Q1 earnings results reflect moves to raise selling prices – even if not enough to cover higher costs.

· Base oils demand remains firm in Europe because supply still lags weaker demand.

· Base oils demand in US likely to get support from blenders stockbuilding ahead of Atlantic hurricane season and focus on security of supply.

· Base oils demand in Latin America likely to get support from firm lube demand, limited regional supply.

· Base oils demand in Asia-Pacific likely to be more mixed.

· Chinese base oil demand likely to mostly remain weak, with limited support from stock-replenishment.

· Indian demand for very-light grade base oils typically eases when its discount to retail diesel prices narrows. The discount is narrow.

· Term prices linked to rising diesel prices are getting less competitive in markets like Asia, where spot prices are lower. Trend could incentivize term buyers to trim their requirements.

· Mideast Gulf base oil demand likely to improve following end of Ramadan.