US base oils exports to South America rose to a three-month high in May even as its total exports fell.The diverging trends highlighted signs of firm demand in Latin American markets like Brazil, Chile and Peru.The rise in shipments to South America also pointed to US refiners’ moves to prioritise the region.The strategy tapped US refiners’ logistical proximity to South America relative to other supply sources, as well as the region’s growing structural shortfall in the face of rising lube consumption.The rise in US shipments to South America also left the region more reliant on supplies from a source that faces a higher-than-usual risk of weather-related disruptions over the coming months.The growing reliance on supplies from the US could in turn magnify the impact of any such supply disruptions.Total US base oils exports of 527,000 barrels (74,000 tonnes) to South America in May rose from 433,000 barrels the previous month and by 7% from year-earlier levels, government data showed.The year-on-year increase was the eighth in nine months.The rise in shipments boosted the share of US exports bound for South America to 28% of its total exports in the first five months of this year. The share was up from 25% of the total in 2023.The higher share reflected a pick-up in shipments to Chile and Peru especially, as well as a smaller increase in flows to Brazil.The rise in shipments also boosted the share of those markets’ imports that originated from the US.Supplies from the US accounted for more than 90% of Peru’s base oils imports so far this year. The share was up from less than 82% in 2023.Supplies from the US accounted for more than 75% of Brazil’s imports in the first five months of the year, up from a 72% share in 2023.The high share reflected the US’s long-term role as the key supplier for those markets.The rising share reflected a slowdown in arbitrage shipments to the region from other markets like Europe and Asia.The dynamic left key markets in South America increasingly reliant on regular shipments from the US..US’ May base oils/lube exports fall.US’ May base oils exports to Europe fall.Brazil’s May base oils supply-demand balance stays tighter
