Weak demand and rising raw material prices lead lubricant factories to maintain low inventories for risk aversion
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Prices of upstream base oil and additive raw materials remain volatile, leading to persistently high production costs and continually narrowing profit margins for companies. The recovery of downstream demand from automotive and industrial end markets has fallen short of expectations, resulting in weak purchasing willingness and a growing problem of channel inventory accumulation. It is increasingly difficult to pass on costs, with rising uncertainties in industry development. Most industry participants maintain a cautious mindset, and market sentiment is dominated by a wait-and-see attitude. Overall, trading activity remains subdued, and factories are generally operating with low inventories of raw materials.
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