Steady upstream ethylene prices combined with consistent lubricant industry demand kept the global Poly Alpha Olefin (PAO) market stable across APAC, Europe, and the USA during the first half of June. Despite the regional industrial and automotive activity, prices have remained stable due to prudent purchasing, inventory optimisation, and balanced supply-demand fundamentals.
The global PAO market in the Asia-Pacific (APAC), Europe, and USA regions maintained a stable price trend during the first half of June, has been helped by balanced supply-demand fundamentals, consistent procurement from significant downstream sectors, and a stable upstream ethylene market in the USA and APAC, particularly lubricants.
According to the Society of Motor Manufacturers and Traders (SMMT), the passenger car sales in the Europe, especially the UK, increased by a significant margin of 24.7% by month over month to reach 150,070 units, but the PAO demand remained on moderate levels. Although the automotive industry, particularly lubricant blending, benefited somewhat from this increase in vehicle registrations, but there was no adequate increase in PAO consumption overall. Market players persisted in using a cautious approach to procurement, hence giving inventory optimisation precedence over new bulk purchases. Despite better auto sector dynamics, this cautious approach prevented any significant price fluctuations and maintained the balance of the PAO market overall.
In the Asia-Pacific region, the PAO consumption has been steady. Meanwhile in China, the industrial and automotive lubricant production has remained consistent which is supported by stable demand from OEMs and aftermarket service providers. The regional supply chain remained uninterrupted, and feedstock availability for PAO production continued to meet processing requirements. Even in India, the market sentiments were shaped by stable export demand and balanced inventories. Although the upstream cost movements were minimal, most buyers refrained from forward buying, maintaining a wait-and-watch approach due to global macroeconomic uncertainty.
Due to consistent demand from the industrial, automotive, and lubricant sectors, the PAO market in the US has also remained stable. Market stability was maintained by the core manufacturing and transportation segments and their steady consumption of PAO in spite of persistent economic challenges. Due to stable refinery operations and stable upstream ethylene prices, traders reported that supply availability was still adequate. A composed market environment was further enhanced by the absence of substantial sourcing restrictions and logistical disruptions. To keep the market steady with few changes in supply or price, buyers mostly kept a vigilant attitude, concentrating on the short-term procurement and inventory optimisation.
ChemAnalyst predicts that the international PAO market will stay stable in the coming weeks due to stable upstream ethylene prices, balanced supply fundamentals, and steady demand from the lubricant sector. Although cautious procurement and inventory-led strategies might persist, a slight improvement in demand could occur if regional industrial and automotive activity increases.
