Brazil’s Nov base oils supply exceeds demand

Brazil’s base oils supply rose in November as a rebound imports more than covered for a drop in domestic output.

The country’s demand held firm in November from year-earlier levels but fell from October.

Supply duly reverted to a surplus over demand in November, partially reversing a shortfall the previous month.

The higher surplus, especially compared with year-earlier levels, could limit the size of any pick-up in base oils requirements over the coming months, when lube demand typically gets a seasonal boost.

Brazil’s base oils output of 50,700 cubic meters (45,000 tonnes) in November fell from more than 62,000 cubic meters the previous month, government data showed.

The October volume was the highest in nine months.

The November volume was closer to more typical levels over the past year.

Lower output partially cushioned the impact of a rebound in base oils imports to 89,000 cubic meters in November.

The volume was the second highest in six months and extended a strong rise in Brazil’s imports throughout last year.

The rise in imports added to a surge in shipments from overseas markets in 2023.

The shipments helped to cover for a slump in Brazil’s base oils output that year because of a heavy round of plant maintenance work in the country.

The rise in shipments in the first eleven months of 2024 instead helped to meet the country’s firm lube demand, especially for premium-grade base oils.

But a pick-up in base oils exports throughout last year pointed to rising surplus volumes in the domestic market.

Signs of weaker domestic lube consumption from August coincided with a surge in base oils exports from the end of the third quarter.

The pick-up in exports helped to boost Brazil’s total demand and narrow its shortfall relative to supply.

Even so, Brazil’s supply surplus of around 39,000 cubic meters in the three months to November contrasted with a shortfall of more than 20,000 cubic meters during the same period in 2023.

The larger surplus at the end of last year could curb the size of any pick-up in Brazil’s requirements early this year.

The country’s lube demand typically gets a seasonal boost in the first quarter of the year.

Any further fall in Brazil’s domestic lube consumption from year-earlier levels would limit further the size of its base oils requirements.

It would also put more pressure on the country to cut output or boost exports to maintain more balanced fundamentals.