Base oil prices keep hitting new lows; the bullish trend is unlikely to return
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Since the sharp drop in international oil prices in 2014, low oil prices have continued to put pressure on the commodity market, and domestic base oil prices can no longer regain their former glory. In 2015, the domestic base oil market continued to struggle with weak supply and demand; it failed to show strength during peak seasons and remained sluggish in off-peak periods, behaving more like an elderly person who feels neither joy nor sorrow. Whether it’s upstream and downstream parties or intermediaries, they all adopt a production-based on sales and ordering according to demand approach, with a strong tendency to avoid risks. A lukewarm level of market activity has become the norm.
The fundamental reason behind the trend in base oil prices is the ongoing weakness in supply and demand. On the demand side, as the domestic economic growth rate has continued to slow down in recent years, the lubricant industry has found it difficult to maintain rapid growth; industries related to infrastructure such as steel, cement, and metallurgy exert only a relatively limited impact on the demand for industrial lubricants ； Moreover, the growth rate of the car ownership population is also showing a slowdown, which will lead to increasing pressure on automotive lubricants.
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