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Brazil’s base oils imports held firm in July, but the US share fell to its lowest since December 2022
India, China and South Korea increased shipments as the price gap between US and Asian markets made alternative supplies more attractive
The shift gives alternative suppliers an opportunity to build market share in one of the US’s key overseas markets
Brazil's base oils imports held firm in July, but the supply mix shifted sharply as tighter US availability pushed buyers toward India, China and South Korea.
Imports of more than 60,000 tonnes in July fell from more than 80,000 tonnes in June, but remained up 1% year on year, MDIC data showed. July was the fifth year-on-year increase in six months and remained close to the 12-month average of around 63,000 tonnes.
June's surge left supply exceeding demand by the largest margin in 21 months even as plant maintenance in Brazil cut domestic output. July's pullback in imports followed the resumption of normal production alongside that surplus.
The lower total masked a 28% year-on-year slide in US shipments. The US typically supplies more than 74% of Brazil’s base oils, but its share fell to 55% in July, the lowest since December 2022.
The pullback coincided with tighter US supply, driven by lower stocks and the need to cover a slump in the country's own imports, cutting volumes available for export.
Tighter supply and higher US prices relative to Asia increased the attraction of alternative sources including India and China, both of which increased base oils production and exports in the first half of the year.
Key Highlights
· Imports from India rose to more than 6,900 tonnes, the highest since December 2022.
· Imports from China rose to more than 3,100 tonnes, the highest in more than six years, up from typical monthly volumes of less than 50 tonnes.
· Imports from South Korea rose to 5,300 tonnes, the highest in four months, with additional cargoes setting off for Brazil in July.
· The India and China volumes follow a rise in both countries' own Group III production and exports, as well as a surge in the premium of US Group III prices over Asia.
Market Repercussions
This kind of diversification is likely to continue as supply disruptions and wide regional price differences give buyers more reason to widen their supply base.
Even once Group III supply eventually recovers in the Middle East, or expands further in the US, some of that shift could remain, giving newer suppliers such as India and China an opportunity to build market share and establish themselves in supply chains that the US has traditionally dominated.
