Asia’s lube demand rose in August for a second month from year-earlier levels mostly because of unusually firm consumption in India for the time of year.The stronger demand cushioned the size of the seasonal slowdown in consumption in the month of August from July.The lower consumption from July still contrasted with a rise in the region’s base oils output to a thirteen-month high.Lower demand and higher supply triggered a rise in Asia’s supply-surplus to the highest level in a year.Any extension of that trend would contrast with tighter-than-usual supply during the first half of the year and could prompt sellers to target more distant markets to clear the volumes.Asia’s lube consumption of more than 800,000 tonnes in August rose by 6% and for a second month from year-earlier levels, government data showed.The volume excludes China..Demand rose on the back of strong consumption in India and Pakistan that countered weaker demand in southeast Asian markets like Thailand and the Philippines.Rising consumption cut the size of a seasonal slowdown in demand from more than 830,000 tonnes in July.Lower demand from the month of July contrasted with a rebound in Asia’s base oils output to more than 930,000 tonnes in August..Output rose from typical levels of less than 900,000 tonnes/month during the first seven months of the year.Output rose following the completion of a prolonged round of plant-maintenance work during that period.Higher output and lower demand lifted the surplus of Asia’s supply over demand to a one-year high of more than 120,000 tonnes.The rise in surplus supply extended a typical trend for the month of August.The size of the surplus was still the lowest for the month of August in five years.The smaller surplus partly reflected the impact of firmer demand and the structural fall in Asia’s base oils output in recent years.That structural picture is set to change following the start-up in September of a new Group II base oils unit in Singapore.Additional production capacity is set to start up in India during the fourth quarter.Scheduled plant-maintenance work is also set to be much lighter over the coming months than during the first half of the year.A structural recovery in supply would put the onus on a strong rise in Asia’s lube demand to keep fundamentals as balanced as they were during the first half of the year.A more likely prospect is of the expected rise in supply outpacing any pick-up in demand.The scenario would put pressure on regional suppliers to eye additional markets to absorb their surplus volumes..Thailand’s August lube demand falls.Japan’s August base oils output falls.S Korea's August base oils output rises.Asia’s July lube demand rises.Base Oil News stories and analysis also available on ICIS platform
