India’s October lube demand rises

India’s lubricating oil demand rose to a seven-month high in October as a raft of festivals boosted consumption.

Healthy economic growth and rebounding automobile sales provided further support.

India’s firm lube consumption contrasted with falling base oils imports in recent months, cutting sharply this year’s surplus of supply over demand.

Lube consumption of 410,000t in October rose from 385,000t the previous month to the highest since March, government data showed.

But demand fell by 11pc from year-earlier levels.

The lower year-on-year consumption came at a time when India’s economy is forecast to grow at a slower pace than earlier this year amid rising interest rates and slowing growth in overseas markets.

Any such slowdown is expected to be more muted than other markets as the economy gets support from a growing domestic market.

India’s automobile sales so far showed no such slowdown. Except for three-wheelers, auto sales rose in October from year-earlier levels and from October 2019 levels, before the pandemic struck.

Passenger car sales rose in October for a sixth month in seven. Tractor sales rose strongly in October after demand fell in each of the previous three months.

Industrial activity also showed signs of holding firm.

The country’s manufacturing purchasing managers’ index unexpectedly rose in October on the back of a rise in factory orders.

Higher domestic base oils production this year helped to cover more of the country’s lube consumption.

Competitive prices added to the attraction for blenders to use domestic base oils supplies at a time when their margins faced sustained pressure.  

But base oils imports have fallen more steeply than the rise in domestic production.

An extension of that trend raised the prospect of increasingly tighter supplies in the face of a steady rise in demand.