Brazil’s lube demand rose in December for the first time in seven months, highlighting the Latin American region’s firmer consumption compared with other markets like Europe.
The pick-up in demand raised the prospect of Brazil maintaining more balanced base oils supplies at the end of last year and early this year.
The trend would likely sustain steady base oils demand during the first few months of this year and provide a welcome outlet for shipments from key sources like the US.
Brazil’s lube demand of 86,930mᶟ (77,000t) in December rose by 6pc from 82,220mᶟ the same month a year earlier, according to IBP.
The 5pc slowdown in demand from November was smaller than the 11pc contraction during the same time in 2020 and 2021.
The pick-up in demand was insufficient to prevent a 6pc fall in Brazil’s lube consumption to 1.06mn mᶟ in 2022 from the previous year.
Consumption ebbed during most of the year along with a slowdown in the country’s economic growth in the face of high inflation and rising interest rates.
Brazil’s economy is forecast to grow even more slowly this year than last year.
The firmer lube demand in December bucked the trend of slower economic growth.
It coincided with a drop in inflation to its lowest since early 2021 and interest rates that held unchanged since August.
The steadier demand partly reflected firmer consumption of industrial oils.
Consumption had contracted more slowly every month since September, before rising in December for the first time in six months.
Lube demand also got support from a pick-up in consumption of passenger car motor oils (PCMO), which are considered more of a bellwether for the state of the services sector.
The 9pc rise in PCMO demand in December was insufficient to prevent a 5pc drop in total consumption in 2022. The contraction was slightly smaller than the fall in Brazil’s total lube demand.
It also outperformed the 10pc fall in consumption of heavy-duty engine oils in 2022.
