Brazil’s November Base Oils Supply Outpaces Demand on Import Jump

Brazil’s base oils supply outpaced demand in November for the first time in four months as a sharp rise in imports coincided with a fall in lubricants consumption.

Total supply, or output and imports combined, climbed to a four-month high of more than 147,000 cubic meters (131,000 tonnes) in November, ANP data showed.

Demand, or domestic consumption and exports combined, fell to an eleven-month low of less than 125,000 cubic meters, tipping the market back into surplus.

The surplus helped to replenish lower stocks and extended blenders’ incentive to maintain lean inventories in the face of volatile demand.

The dynamic raised the prospect of a slowdown in Brazil’s base oils requirements during the final weeks of last year and early this year, even as supply showed signs of staying higher.

Key Highlights

·         Brazil’s base oils supply flipped from a 22,000 cubic-meter deficit in October to an eleven-month high of close to 24,000 cubic meters in November.

·         Brazil’s base oils production edged down to 49,900 cubic meters, remaining close to the January-November average of 52,500 cubic meters/month.

·         Output at the Reduc refinery dipped to its second-lowest level in eighteen months, holding below typical levels for a fourth straight month.

·         Prolonged lower output pointed to production issues that lasted longer than expected, tightening Group I brightstock supply.

·         Brazil’s base oils imports rose to 97,500 cubic meters in November, up from 65,100 cubic meters in October and the highest since September 2024.

·         Brazil’s lube consumption fell by more than 5% year on year in November and for the first time since July.

Market Repercussions

Brazil’s balanced-to-tight base oils fundamentals through most of 2025 pointed to blenders’ moves to maintain lean stocks at a time when demand remained volatile.

An extension of that strategy could trigger a slowdown in import demand at a time when US refiners faced the challenge of managing surplus supplies during the winter months.

Any recovery in Brazil’s domestic base oils output would further cut the need for imported supplies.

Signs of a jump in US base oils exports to Brazil in November, and subsequent arrival of those shipments in December, could compound the rise in supply and deepen a subsequent pullback in requirements.