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Exports to Mexico extend steep slide for fifth straight month
Other markets struggle to consistently replace Mexico as outlet for surplus supplies
Drop in exports to Mexico, combined with rising global supply, increases South America's strategic importance
US base oils and lubricants exports to Mexico extended their slide in November, falling to the lowest in almost three years and intensifying pressure on other markets to absorb more surplus US supply.
Exports to South America held firmer relative to some other destinations but were insufficient to counter the slump in flows to Mexico.
Total US base oils and lubricants shipments to Mexico fell to less than 700,000 barrels (96,000 tonnes) in November, down from more than 900,000 barrels in October and 58% lower year on year, US Census Bureau data showed.
Key Highlights
· US exports to Mexico fell by more than 40% year on year for a fifth straight month, underscoring the abrupt slump in shipments to the country from mid-year.
· Mexico’s share of total US exports dropped to 31% in the five months to November, down from 45% in the first half of the year, highlighting the scale of the shortfall that other markets have had to absorb.
· US exports to South America held steadier, falling from October but still rising 2% year on year, marking the fourth increase in five months.
· US exports to Argentina rebounded, climbing to their highest level in three months and the second-highest in more than two years.
Market Repercussions
US exports fell in recent months even as a pick-up in shipments to markets like Europe, South America and Africa partially cushioned the impact of weaker flows to Mexico.
But none of those destinations are able to consistently absorb the large volumes that Mexico was previously taking.
The steeper slump in US base oils exports in November reflected the repercussion of that dynamic, which is likely to repeat itself over the coming months unless there is a marked recovery in shipments to Mexico.
At the same time, the relative strength of US flows to South America underscored the region’s growing strategic importance as rising global supply intensifies competition for more distant outlets.
