US’ May exports to Mexico stay low

US base oil exports to Mexico stayed relatively low in May even as shipments rose to other key outlets like South America and Europe.

Base oil exports of 442,550bl in May edged up 4pc from a six-month low of 426,680bl in April, government data showed.

The May volume was the second lowest since last October and down from typical levels of more than 506,000 bl/month over the past year.

The lower volumes to Mexico coincided with a pick-up in shipments to South America in May and a surge in exports to Europe.

Mexico has regularly been a key outlet for surplus supplies of very-light grade base oils from the US. Some of the supplies are used as a fuel-extender.

The drop in US exports to Mexico could reflect lower availability of those supplies for that purpose. Such a trend would have less of an impact on supplies for domestic lubricant producers.

High US diesel prices relative to crude and relative to base oil prices have incentivized refiners to produce more of the motor fuel instead of very-light-grade base oils.

The lower US exports have coincided with a strong rise in Mexico’s lube production and demand so far this year.

The US is the source for almost all of Mexico’s base oil supplies to cover that production.