Brazil’s base oils supply fell in February to the second-lowest level in seventeen months amid a simultaneous dip in domestic output and imports.The lowest level during that period was in December.Supply dipped despite the lack of any build-up of surplus volumes to clear at the end of last year.The dynamic raised the prospect of keeping base oils stocks tighter than usual ahead of a seasonal pick-up in domestic demand from the end of the first quarter of the year.Blenders’ lower stocks could reflect concern about a slowdown in the country’s economic growth and lube demand even before this month's imposition of US tariffs on imports from Brazil.The country’s base oils output of 42,200 cubic meters (37,500 tonnes) in February fell from more than 50,000 cubic meters in each of the previous four months, government data showed.The volume was the lowest since late-2023, when a heavy round of plant maintenance work slashed domestic output.A surge in base oils imports in second-half 2023 helped to cushion the impact of lower domestic production.That dynamic failed to repeat itself this time.Base oils imports of 46,400 cubic meters in February fell from 88,000 cubic meters the previous month to the second-lowest level since end-2021.Total supply, or domestic output and imports combined, duly fell back to 88,600 cubic meters in February and to less than 315,000 cubic meters in the three months to February..The three-month volume was down from close to 450,000 cubic meters during the same period a year earlier and the lowest since early 2022.The sustained dip in supply pointed to a lack of urgency among buyers to replenish lower stocks.A preference to maintain lower stocks could reflect expectations that they can secure sufficient volumes of base oils from domestic or overseas suppliers as and when required.It could also reflect concern about slower lube demand growth over the coming months and uncertainty about the economic outlook.Any such concerns coincided with Brazil’s flatlining or shrinking industrial production in February for a fifth month from the previous month.The period of slowing industrial activity mirrored the timing of a sharp rise in the country’s interest rates from last September in a bid to reverse persistently high inflation..Argentina’s Feb base oils supply rises.US January exports to S America stay low
