Brazil’s lubricating oil consumption rose for a second month in January as a recovery in demand extended to industrial oils.
Strong lube consumption raised the prospect of steady demand for base oils from domestic and overseas producers over the coming months.
The trend would contrast with a slump in domestic lube consumption at the beginning of last year.
The slowdown at that time coincided with a large overhang over surplus base oils supplies. Base oils demand fell in response.
The scenario is likey to be different this year.
Brazil’s lube demand had got support in recent months mostly from firm consumption of passenger car engine oils (PCMO).
The rise in January’s lube demand extended to heavy-duty engine oils (HDEO) and industrial oils.
Total lube consumption of 86,580mᶟ (76,690t) in January was steady from the previous month and rose by 20pc from year-earlier levels, according to IBP.
The surge in consumption followed a smaller rise in demand in December and mirrored a similar improvement in the country’s economic performance since late last year.
Brazil’s index of economic activity rose in December for the first time in five months.
Automobile production returned to growth in January. It had contracted in December for the first time in eight months.
High interest rates continued to dampen economic activity. But the sharp fall in inflation in the second half of last year curbed the prospect of further rate-increases.
The recovery in Brazil’s industrial lube consumption mirrored the recent improvement in the country’s purchasing managers’ index (PMI).
The PMI recovered in January to its firmest in three months.
The 7pc rise in industrial lube consumption in January was its fastest growth in eight months.
The 14pc rise in HDEO consumption was the first increase in demand in ten months.
PCMO consumption continued to drive growth with demand up 34pc from year-earlier levels.
This time, industrial-related lubricants supplemented rather than countered the strong engine oil demand.
