Brazil’s March Base Oils Output Stays Low, Fundamentals Tighten

Brazil’s base oils output held near a two-year low in March, as an unusually strong seasonal rebound in demand tightened domestic fundamentals and increased reliance on imports.

Total output edged up to 35,400 cubic meters (31,000 tonnes) in March, up from 34,000 cubic meters in February but still down 39% year on year and for an eight straight month, ANP data showed.

The volume was the second lowest since November 2023, with February the lowest level during that period.

The extended slowdown in production increased Brazil’s dependence on imports just as global base oils supply tightened and prices surged.

A seasonal rebound in demand amplified the imbalance between supply and consumption.

Key Highlights

·         Output stayed near a two-year low as production at Petrobras’ Group I plant at its Reduc refinery held at its second-lowest level in 28 months.

·         Total supply, or output and imports combined, came to around 117,000 cubic meters, holding at a seven-month low.

·         Imports accounted for around 70% of total supply for a second month and 67% in the first quarter, up from 60% in 2025.

·         Demand rose to a multi-month high on the back of an unusually strong seasonal pick-up in lubricants consumption in March from February.

·         Brazil’s supply lagged demand for a third straight month, with the shortfall the largest since August 2025.

Market Repercussions

An extension of Brazil’s base oils production issues would prolong its reliance on imports to cover a larger-than-usual share of its requirements.

Even with a recovery in output, the widening supply shortfall in the first quarter, especially in March, increased its need for additional import volumes to replenish depleted inventories.

Securing those volumes was likely to be more challenging after global supply tightened and prices surged in March, with concern about availability adding to the seasonal pick-up in global demand.

Brazil’s growing reliance on overseas supplies left it more exposed to those tighter global market conditions.