Brazil's Jan base oil imports hold steady

Brazil’s base oils imports held steady in January amid firm domestic demand and balanced supply.

The steady imports provided key overseas base oils producers like the US with a welcome outlet for their base oils supplies.

The steady flows were all the more valuable for US refiners in view of weaker demand in other overseas markets like Europe and India, as well as in their own domestic market.

Brazil’s demand for overseas base oils shipments was likely to hold steady as its supply-demand fundamentals remained relatively balanced.

The flow of shipments to Brazil showed signs of holding in a narrow range through February.

The country’s base oils imports of around 64,300mᶟ (57,000t) in January edged down from almost 64,800mᶟ the previous month and from just over 67,000mᶟ in November, government data showed.

Total shipments of around 129,100mᶟ in December and January combined rose by more than 50pc from 84,340mᶟ during the same two-month period a year earlier.

Brazil’s base oils imports fell during that year-earlier period as the country sought to clear a large overhang of surplus supplies.

The surplus had built up during second-half 2021 in response to rising domestic base oils production, a surge in base oils imports and falling demand.

The country avoided a repeat of that scenario during the second half of last year, even with the addition of arbitrage shipments from Asia and Europe.

Brazil instead faced a pick-up in domestic lube demand in recent months and a less attractive arbitrage for base oils shipments from Asia.

The trend raised the prospect of Brazil's supply-demand balance holding steadier over the coming months.

Firm lube consumption and the less workable arbitrage from Asia also increased importers’ reliance on shipments from the US.

The trend highlighted the importance of the Latin American market for US refiners at a time when weak demand and rising competition was curbing buying interest in other regions.