Mexico’s lubricating oil production rose in November on the back of still-firm economic growth.
The sustained rise in the country’s lube output boosted demand for base oils imports from the US.
The rise in demand contrasted with a sustained slowdown in base oils shipments from the US to Mexico since early last year. The trend continued to the end of the year.
The slowdown in shipments from the US eroded Mexican lube blenders’ feedstock supply buffer in the first half of the year.
Supply from the US increasingly lagged Mexico's lube output in the second half of the year.
The flow of supplies from the US is likely to remain tighter than usual early this year as plant maintenance in the country caps its base oils production.
Mexico’s lube production of 57,120 kilolitres (50,600t) in November rose by 6pc from 53,750kl the previous month, according to Mexican chemical industry association ANIQ.
Lube output extended its rise from year-earlier levels every month in 2022.
The country’s lube output is typically similar to its lube consumption volumes. These rose throughout the year amid a sustained rise in economic growth.
Industrial production rose in November for a thirteenth month. Automobile sales rose in December for the seventh time in eight months.
Mexico’s strong lubricating oil consumption added to firm lube demand in other major Latin American markets during the final months of the year.
The trend contrasted with a sharp slowdown in lube demand in Europe especially during the fourth quarter of the year.
Firm lube consumption and production increased requirements for a steady flow of base oils supplies from the US.
Mexico is almost entirely reliant on base oils imports to cover its lubricants feedstock requirements.
The US is the source of almost all its base oils supplies.
Shipments from the US had previously far exceeded Mexico’s requirements for its lubricant production.
Some of the surplus volumes had been used as a fuel-extender instead.
High diesel prices and lower-than-usual US base oils production in 2022 triggered a slump in the flow of US supplies to Mexico.
