Mexico’s October Lube Demand Resumes Fall

Mexico’s lubricants demand fell again in October, weighed down by a prolonged slump in industrial oils consumption.

The demand contraction contrasted with a surge in Mexico’s base oils imports in recent months, widening a mismatch between supply and end-user demand.

The growing surplus could prompt a slowdown in Mexico’s base oils imports, which could compound a recent slump in US base oils and lube shipments to the central American country since July.

Mexico’s lube demand fell to 59,000 kilolitres (52,000 tonnes) in October, down 4% year-on-year, driven by a 17% slide in consumption of industrial oils, government data showed.

The weakness in industrial lubricants more than offset a second straight rise in automobile lube consumption and mirrored the sustained slowdown in Mexico’s industrial activity.

Shrinking lube demand widened its imbalance with base oils imports.

Consumption accounted for less than 50% of Mexico’s base oils imports for the first time in more than two years, down for closer to 70% in the year to June.

The shift reflected a surge in base oils imports since June even as domestic demand extended its decline.

The rise in imports coincided with a jump in US base oils exports to Mexico during the same period.

But the increase was insufficient to offset a slump in US lubricants exports to Mexico since July.

Any pullback in Mexico’s base oils imports could compound the slide in US lubricants exports by extending the slowdown to US base oils shipments to the country.