Americas’ August base oils supply falls

Base oils supply in the Americas fell in August to an 18-month low, mostly because of a sharp drop in production in the US.

Output in other markets was also lower than usual.

Base oils supply of around 630,000t in August slumped from more than 760,000t the previous month, according to production data from major base oil-producing countries in the region.

The volume was the lowest since February 2021, when an arctic storm forced offline a raft of refineries in the US Gulf coast region.

The drop in output this time also reflected a slump in production in the US' Texas Gulf coast region. But there was no storm this time.

Output in other markets also stayed low, compounding the impact of the drop in US supplies.

The low output reflected signs of moves to avoid a supply-build in Brazil in the face of slowing lube consumption.

Lower output in Argentina coincided with a surge in the country’s base oils imports as buyers took advantage of a wide-open arbitrage to move shipments to Latin America.

Lower output levels in Canada contrasted with a rising share of middle distillates production in the country.

The low production levels left Americas supply falling in August for a fourth straight month from year-earlier levels. The slowdown cut total supply to 6.04mn t in the first eight months of the year.

The volume was down 7pc from 6.47mn t during the same period last year.

Output fell even as lube demand rose by 8pc in the Americas in the first eight months of the year.

Output in August lagged regional demand for the first time in 18 months.

The size of the shortfall was much larger this time.

The shortfall prompted the need for lower US exports and a rise in imports to fill the gap, and prices at levels to attract the additional supplies.

US base oils posted prices held steady in July and August, even as prices fell in Europe and Asia-Pacific.