Asia’s February lube demand rises

Asia’s lube demand rose in February from year-earlier levels for a third month amid strong consumption in southeast Asia.

The region’s lube consumption of more than 750,000 tonnes in February rose by 4% from year-earlier levels, government and industry data showed.

The firm demand lifted total consumption to more than 1.55 million tonnes in the first two months of the year, up 4% from year-earlier levels.

The volumes excluded China.

Demand rose on the back of strong lube consumption in southeast Asia, especially in markets like Thailand and Philippines.

The strong lube demand limited a build-up of surplus lubricants and base oils supplies ahead of a typical seasonal surge in regional consumption in the month of March.

The seasonal rise in demand coincided with base oils plant maintenance work throughout the Asia-Pacific region during the first quarter of the year.

The maintenance work gathered pace in the month of March.

The firm fundamentals squeezed the surplus of base oils supply over demand in January and February to the lowest level for that two-month period in more than five years.

The supply-demand balance likely tightened even more in the month of March.

The dynamic supported increasingly firm base oils prices in the Asia-Pacific region in the first quarter and start of the second quarter of the year.

The firm supply-demand fundamentals also likely peaked during that period.

They now faced the prospect of gradually reversing during the second quarter of the year.

Demand usually faces a seasonal slowdown in the second quarter from the first three months of the year.

The region’s lube consumption could face further pressure amid uncertainty about the impact of the US trade-war with China and the imposition and then temporary halt to US tariffs on other markets in Asia.

Any slowdown in demand would coincide with the gradual completion of base oils plant maintenance work in the region.