Argentina's May Lubricants Demand Dips As Stock-Building Unwinds

Argentina's lubricants demand fell in May for the first time in five months, the latest sign that the disruption-driven buying surge of March and April was reversing across global markets.

Demand fell to 18,300 cubic metres (16,200 tonnes) in May, down 2.5% from a year earlier and by 1% from April, Ministry of Economy data showed.

Argentina's lubricants demand rose from April to May in each of the previous four years. This year's fall extended a pattern already visible in Europe and Asia, where buyers accelerated purchases during March and April before drawing on those stocks in May.

Demand instead reverted in May toward underlying consumption.

Key Highlights

·         Automobile lubricants demand fell 2% year on year after rising 6.9% in April and 10.6% in March.

·         Industrial oils demand declined 6% after increasing 14.3% in April and 1% in March.

·         Lubricants demand fell in May from April for the first time in five years, breaking a seasonal pattern and reinforcing a similar trend in other markets including Italy.

·         The March-April surge in domestic demand reduced volumes available for export, which slumped in May to a six-month low.

Market Repercussions

The earlier surge in domestic demand absorbed surplus production, slashing supply available for export in May.

The slowdown in May demand reduced pressure on domestic supplies and increased the scope for export availability to recover during the coming months.

Any recovery in exports would add to growing surplus availability from Northeast Asia and steady shipments from Saudi Arabia, reinforcing the gradual improvement in global supply.

Argentina’s lubricants demand would then increasingly depend on the country's underlying industrial and economic activity rather than disruption-driven inventory building.