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Latin America's lubricants demand eased in May, but supply fell even faster, keeping the market tight
Mexico's lubricants demand increasingly matched its base oils imports, pointing to less surplus supply than early this year
Hurricane season and tighter US spot supply could keep Latin America's base oils market tight for longer
Latin America's lubricants demand eased in May, but the regional market stayed tight as base oils supply fell even faster than consumption.
Demand slipped to just over 205,000 tonnes in May from more than 210,000 tonnes in April, down 4% from a year earlier, ANP, Ministry of Economy, INEGI and other government data showed.
Supply from regional production and US exports fell even faster, leaving the gap between supply and demand at one of its smallest levels in six months.
Mexico illustrated the shift most clearly. Its base oils imports fell to their lowest level in more than two years while lubricants demand held up better, leaving consumption accounting for its largest share of imports since early 2024.
The shift pointed to a growing proportion of imported base oils moving directly into lubricants production rather than other uses. The lower imports also pointed to tighter US spot export availability as refiners prioritised domestic and overseas term buyers.
That left the regional base oils market with less slack despite softer demand.
Key Highlights
· Mexico's lubricants demand fell for the first time in four months in May, as industrial oils consumption slumped while automotive lubricants continued growing.
· Mexico's base oils imports fell to their lowest level since January 2024 despite lubricant demand remaining relatively resilient.
· Lubricants demand accounted for more than 85% of Mexico's base oils imports, the highest share since early 2024.
· Latin America’s output and US exports to the region exceeded lubricants demand by less than 10,000 tonnes, among the smallest surpluses outside March.
Market Repercussions
The regional market remained tighter than at the start of the year even with the softer lubricants demand.
That left the region more exposed to any further reduction in US export availability, at a time when refiners there also had to manage supply through the Atlantic hurricane season.
The smaller surplus also drew in more distant suppliers. Steep discounts on Asian cargoes versus US prices made them increasingly attractive, giving exporters there an opening to expand into the region.
