US’ Oct base oils exports to Latam fall

US base oils exports to Latin America fell to a nine-month low in October as markets like Brazil and Argentina covered more of their requirements with arbitrage shipments from other sources.

A swathe of cargoes from Asia-Pacific and Mideast Gulf moved to Latin America in the third quarter of the year. A large portion of the supplies reached the region in the fourth quarter.

Buyers locked in the shipments in view of their discount to prices for supplies from other markets like the US.

The moves cut their requirements for supplies from the US.

Lower-than-usual base oils production in the US in recent months because of plant maintenance work added to the attraction of securing supplies from other sources.

US exports of 408,020bl (57,470t) in October to Latin America, excluding Mexico, fell from more than 592,000bl the previous month, government data showed.

Exports to the region fell from year-earlier levels for the first time in five months.

Even with the slowdown, base oils exports of 4.92mn bl to Latin America in the first ten months of the year rose by 4pc from 4.73mn bl during the same period last year.

Shipments to the region rose even as US base oils output fell in the first nine months of the year.

The rise in shipments helped to meet firm demand in the Latin American market and highlighted the region’s growing importance for US refiners.

More arbitrage shipments from Asia-Pacific reached markets like Argentina in November.

But the surge in arbitrage supplies to Latin America waned in the final months of the year as Asia-Pacific supply tightened.

The prospect of a slowdown in arbitrage flows from other markets was likely to increase Latin American buyers’ need to procure more supplies from the US over the coming months.