Argentina’s base oils supply fell to a five-year low in July as a dip in domestic output compounded persistently-low imports.The lower supply lagged domestic demand, prompting a pause in Group I base oils exports and a sharp drop in the country’s base oils stocks.Any extension of the drop in Argentina’s base oils output could trigger a rise in demand for supplies from overseas markets.Weak domestic lube demand and the sharp depreciation of Argentina’s currency in recent months could complicate any such moves.Such a scenario could leave Argentina with increasingly tight base oils supplies.A rapid rebound in the country’s base oils output would conversely avoid that outcome.Even so, the focus on prioritising sufficient supply for Argentina’s domestic market could push back the timing of a resumption of large base oils shipments to overseas markets..The country’s base oils output came to 3,700 cubic meters (3,200 tonnes) in July, government data showed.The volume dipped from average levels of more than 13,000 cubic meters in each of the previous four months to the lowest since March 2024.High output levels during those previous months left large surplus volumes available for export and to tap high Group I base oils prices in overseas markets..Those high base oils prices extended into the third quarter of the year, prolonging the incentive to line up more shipments to move to overseas markets.The sharp drop in Argentina's base oils output in July, despite still-attractive arbitrage opportunities, pointed to unexpected production issues.The lack of any significant rise in imports to cover for the lower production levels added to signs that the drop in output was unplanned.Total base oils supply, or output and imports combined, duly fell to less than 5,000 cubic meters in July..The volume was the lowest since April 2020 and lagged Argentina’s total demand of 20,000 cubic meters in July.Argentina’s base oils stocks helped to cover the shortfall. Those stocks subsequently also then dipped to the lowest in more than a year..Argentina’s July lube demand falls.Brazil’s July lube demand holds steadier.Argentina’s June base oils exports rise.Base Oil News stories and analysis also available on ICIS platform
