India’s Nov lube demand holds firm

India’s lubricating oil demand stayed high in November on the back of strong economic and transport activity.

Strong lube consumption contrasted with a sustained slowdown in the country’s base oils imports to cover some of that demand.

Blenders instead increasingly relied on base oils supplies from domestic producers.

The producers' volumes remained unusually high throughout this year but had little capacity to rise any further.

India’s lube consumption of 408,000t in November edged down from 410,000t the previous month, government data showed.

Demand rose from year-earlier levels for the second time in three months and the seventh time in nine months.

The trend lifted India’s total lube consumption by 3pc to 4.20mn t in the first eleven months of the year.

India’s lube demand held firm even as rising interest rates curbed the pace of the country’s economic growth.

India’s industrial production unexpectedly contracted in October.

But its manufacturing purchasing managers’ index for December rose more than expected amid rising new orders and confidence about the outlook.

Surging automobile sales in November reflected the firm demand.

India’s strong lube demand and limited surplus domestic base oils supply raised the prospect of a pick-up in blenders’ reliance on imports to cover the shortfall.

Buyers preferred to hold off such moves during the final months of the year as healthy availability of supply and falling prices curbed any urgency to lock in supplies.

Lower-priced supplies from domestic producers added to blenders' preference to cover more of their requirements with domestic supplies.

New base oils production capacity was scheduled to come online in India in the coming months.

The start-up of new units often falls behind schedule. They then take time for production to stabilize.