Rising demand coincides with lower base oils output, keeping pressure on need for overseas supplies.
Demand likely to get support from strong economic activity and auto sales.
Rising production capacity in Asia increases importance of India's continued demand growth
India’s lube demand rose in November for a fifth month, supported by strong economic growth and signs the trend may continue.
The sustained rise in consumption reinforced India’s growing importance as a key demand centre for global base oils suppliers.
It also kept pressure on blenders’ base oils feedstock inventories, prompting firm requirements for additional overseas cargoes.
Plant-maintenance work in India in November raised the prospect of keeping domestic base oils output lower for a second month, adding to blenders’ reliance on imports.
India consumed 391,000 tonnes of lubricants in November, up from 362,000 tonnes in October and by 11% year-on-year, government data showed.
Total demand of 4.27 million tonnes in the first eleven months of the year rose by 4%, or 176,000 tonnes, from year-earlier levels.
The size of the increase highlighted India’s growing need for additional base oils supplies.
New production capacity in southeast Asia and imminent expansions in India underscore the importance of continued demand growth to absorb the rising supply.
Lube consumption is likely to hold firm in the short-term amid multiple signs of healthy economic activity.
India’s auto sales are expected to extend their rise this month after fourth straight months of gains.
“GST rate cuts coupled with OEM-Dealer retail offers continued pulling customers to showrooms," Federation of Automobile Dealers Association President C S Vigneshwar said.
The Reserve Bank of India’s early-December interest-rate cut is expected to further bolster auto sales, consumer sentiment and broader economic activity in the coming months, providing additional support to lube demand.
