However, a number of recent reports seem to indicate that the immediate future may not be so rosy. Industry analysts, economists and investment bankers point to troubling signs in the Chinese economy that may signal the possibility of an economic downturn in the near future.

China is now the EUs second trading partner behind the United States, and the EU is Chinas biggest trading partner. As a result, Chinas lost economic momentum bodes ill for companies exposed to the worlds second largest economy.

The picture in China is still hazy, Milind Phadke, energy practice director for Kline Kline & Co. told the ICIS Asia Base Oils Conference in Singapore last June. What we know for sure is that the first three quarters of 2012 saw contraction from 2011 lubricant consumption levels.

The issue with Chinas economy, according to the New York Times Paul Krugman, is the lopsided balance between consumption and investment. In a July 21 column, he wrote, America … devotes 70 percent of its gross domestic product to consumption. For China, the number is only half that high, while almost half of GDP is invested.

He noted that the main thing holding down Chinese consumption seems to be that Chinese families never see much of the income being generated by the countrys economic growth.

Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does, Krugman wrote. Consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump. And the answer, increasingly, seems to be no.

This view was reinforced in a July 19 article in China Economic Review that reported Chinas growth rate of both consumption and investment is slowing. And a slowdown in consumption is backed up by slowing retail sales growth in the first quarter.

Quoting Wang Qinwei, a London-based China economist at Capital Economics, the journal reported, This is clearly bad news for Chinas leaders, as they have pledged to shift the economy away from investment. It would be more comfortable if Chinas slowdown was being accompanied by a shift in the drivers of growth from investment to consumption.

In ordinary times, Krugman said, the world could probably take Chinas troubles in stride. But overextended private borrowers in Western economies are all trying to pull back at the same time, and in so doing may provoke a general slump.

While recent signs point to the possibility that Chinas economy is beginning to stabilize, the countrys lubricant, base oil and additive suppliers may be in for some uncertain times as the economy sorts itself out.