China’s base oils demand rose to a five-month high in August, boosting the need for strong finished lube consumption to avoid a build-up of surplus supplies.Signs of weaker economic activity in the country in August instead raised the prospect of more muted lube consumption.Slower consumption would typically prompt blenders to delay stock-replenishment plans as they take longer to use up their existing inventories.Any reflection of slower demand on China’s domestic base oils prices has so far been muted.That could change as the boost from a seasonal pick-up in lube consumption at the end of the third quarter begins to wane over the coming weeks.China’s base oils demand, or output and net imports combined, rose to more than 590,000 tonnes in August, government and industry data showed.The volume rose from an already-high 528,000 tonnes in July and by 8% from year-earlier levels..The high volume mostly reflected a rise in China’s paraffinic base oils output to a ten-month high of more than 490,000 tonnes in August.The higher output covered more of the country’s requirements, curbing the need to import large volumes from overseas markets.The country’s imports of 119,000 tonnes in August instead held in a narrow range for a third month..The high output and steady imports boosted distributors’ and blenders inventories ahead of a typical seasonal pick-up in lube consumption at the end of the third quarter of the year.China’s firm domestic base oils prices in August and so far in September pointed to scant concern about any such rise in stocks.Firm domestic Group I and Group II base oils prices relative to FOB Asia cargo prices instead increased the feasibility of lining up more arbitrage shipments to move to China.The price-strength suggested that demand was sufficiently strong to absorb a large portion of the base oils supplies.The rise in base oils stocks, and any signs of weaker-than-expected lube demand, could by contrast prompt a sharper adjustment in prices that helps to deter higher output or imports..China’s August base oils output rises.Taiwan’s August base oils exports slip.Base Oil News stories and analysis also available on ICIS platform
