Brazil’s base oils supply stayed higher than usual in June for a third month even as the country’s demand extended its fall.The diverging trends left supply outpacing demand for the second time in three months.But the size of the surplus remained small.Base oils supply, or domestic output and imports combined, came to more than 135,000 cubic meters (121,000 tonnes) in June, provisional government data showed.The volume fell from more than 140,000 cubic meters in each of the previous two months. But it remained above typical levels of around 126,000 cubic meters/month over the past year.The country’s demand, or domestic consumption and base oils exports combined, fell back to less than 135,000 cubic meters in June, from more than 140,000 cubic meters the previous month. .The relatively balanced fundamentals, even with firm supply and weaker demand, reflected the country’s growing base oils requirements after a sustained rise in lube consumption in recent years.The lack of any additional domestic base oils production capacity in the interim left Brazil reliant on growing import volumes to cover the shortfall.Imports accounted for more than 61% of Brazil’s supply in the second quarter of the year, up from 56% in the first quarter and 51% during the final three months of last year.Brazil’s supply lagged demand during those two earlier quarters, when imports fell and their share of supply dipped below 60% of the total.The country’s reliance on imports for more than half of its requirements could sustain firm demand for overseas supplies even if domestic lube consumption extends its slowdown.Steady demand for overseas supplies would facilitate the removal of surplus volumes from the US at a time when its consumption faced a seasonal slowdown during the summer holidays.Even so, a fall in Brazil’s domestic base oils prices for August raised the prospect of boosting the competitiveness of supplies from domestic sources and of increasing their share of a shrinking market.Any such move could then curb requirements for higher-than-usual import volumes from the US..Brazil’s June lube demand extends fall.US’ May base oils exports rise.Latin America’s May lube demand rises.Base Oil News stories and analyses also available on the ICIS platform
