Argentina’s base oils supply rose to a four-month high in December on the back of a sustained rise in the country’s domestic output.Base oils output of 13,900 cubic meters (12,300 tonnes) in December rose from 7,500 cubic meters in November to the second-highest level in eleven months.The rise in production lifted total output to 120,600 cubic meters in 2024. The volume rose by 35% from 89,500 cubic meters the previous year to the highest in at least a decade. Output rose even as domestic lube consumption slumped throughout the year.A sustained drop in the country’s base oils imports partially balanced out the country’s supply-demand fundamentals.Imports of less than 9,000 cubic meters in December fell from year-earlier levels for the seventh time in eight months.Their share of Argentina’s total supply, or output and imports combined, fell to 40% of the total in 2024, down from more than 55% of the total during each of the previous two years.Even with the drop in supplies from overseas markets, a steady flow of base oils exports in the fourth quarter of the year pointed to and helped to trim any build-up of surplus volumes.The dynamic suggested that the ongoing rise in Argentina’s base oils output during the final months of the year focused more on tapping demand in overseas markets.A recovery in Argentina’s domestic lube consumption could curb such surplus volumes and exports.It could conversely have limited impact on such flows as buyers cover rising requirements with additional supplies from overseas markets.Most of those overseas supplies consist of premium-grade base oils, while Argentina’s domestic supply consists of Group I base oils.Such an outcome would reflect a reversion to more typical supply dynamics before the slump in lube demand in 2024.It would also allow domestic Group I supplies to continue to target overseas markets in response to any sustained demand for such volumes.That demand could get support from shrinking availability of Group I base oils in other markets because of plant closures.The dynamic could in turn boost interest in supplies from refiners that continue to produce Group I base oils, like those in Argentina..Argentina's December lube demand falls more slowly.Brazil’s December lube demand rises
