Argentina Dec Lube Demand Falls, Signals Deeper Regional Slowdown

Argentina’s lubricating oil demand fell in December for the fourth time in five months, reinforcing signs of a broader slowdown across Latin America’s lubricants market at the end of last year.

Total lubricants consumption fell to 17,700 cubic meters (15,600 tonnes) in December, down 6% year on year and the lowest level since April, Ministry of Economy data showed.

The extended slowdown added to weakening consumption trends in Brazil and is likely to keep pressure on buyers to minimize inventory levels, limiting interest in surplus US base oils cargoes.

Key Highlights

·         Industrial oils consumption fell 8% year on year in December, underperforming automobile lubricants for a third straight month.

·         Industrial oils production dropped more sharply, keeping stocks at multi-year lows.

·         Fourth-quarter lube consumption totalled 55,200 cubic meters, dipping by 2% year on year and for the ninth time in ten quarters.

·         Full-year 2025 lube consumption slipped to 223,100 cubic meters, down by 0.6% and falling for a third straight year to the lowest level in more than a decade.

·         Base oils exports stayed low for a second month, curbing opportunities to tap overseas demand in markets like West Africa.

Market Repercussions

The drop in Argentina’s lubricants consumption in December eased from an 11% contraction the previous month, when the country’s economy shrank for the first time in more than a year.

The trend underlined the role of lube demand as a useful early indicator of Argentina’s broader economic activity.

Even with a smaller contraction, persistently weak lube consumption is likely to curb buyers’ interest in additional imports from the US, where demand is typically seasonally soft at the start of the year.

Firmer demand in West Africa could partially offset weaker buying interest in Latin America.

The pause in Argentina’s exports of larger cargoes to markets like Nigeria removed another source of supplies for that market, facilitating the lineup of additional US shipments to West Africa.