Asia’s lube demand likely to ease in coming months

Asia’s lube demand is likely to ease over the coming months amid a seasonal slowdown in consumption from the end of the second quarter.

Demand could face further pressure from slower-than-expected economic growth in the face of a trade war between US and China, as well as uncertainty about US tariffs on other Asia-Pacific countries.

Asia’s lube demand is likely to hold at more than 2.45 million tonnes in the second quarter of the year, at similar levels to the first quarter, according to the Base Oil News short-term outlook.

Demand is then likely to fall more steeply to less than 2.30 million tonnes in the third quarter of the year.

The volumes exclude China.

Demand could get additional support from an extension of the strong rise in lube consumption in India over the past year.

Demand could conversely face pressure from weaker-than-expected consumption in southeast Asia.

Markets in southeast Asia faced some of the highest tariffs that the US announced in early April, before it delayed implementation of the tariffs for three months.

A slowdown in Asia’s lube demand over the coming months would coincide with the completion of a raft of base oils plant maintenance work in the region during the first half of the year.

Additional base oils production capacity is expected to come online during the second half of the year, adding to supply.

The improvement in availability would contrast with the first quarter of the year, when maintenance work coincided with firm demand, leaving supply unusually tight.

The tight fundamentals supported firm base oils prices, especially for heavy grades.

Easing demand and improving availability of supply could instead trigger a rise in surplus shipments in the region and the need to line up other outlets for the volumes.