US Oct base oils/lube exports to Latam rise

US base oils and lube exports to Latin America rose to a two-year high in October amid a surge in shipments to Mexico, Brazil and Argentina.

The shipments to the region accounted for an unusually large share of the US’ total exports in October.

The high volume of supplies to that market curbed its urgency to move more shipments to other outlets.

The shipments also raised the prospect of triggering a surge in surplus supplies in Latin America at a time of year when lube demand faced a seasonal slowdown.

US base oils and engine oils exports to Mexico and South America rose to more than 2.80 million barrels (399,000 tonnes) in October, government data showed.

The volume rose from less than 1.95 million barrels in September and accounted for more than 75% of US exports in October.

The volume and share of total US exports were the highest since mid-2022.

The surge in shipments to Latin America helped to clear surplus volumes from the US.

The removal of the shipments curbed the pace of any build-up of surplus supplies in the US in the fourth quarter of the year.

They also eased pressure on US suppliers to open the arbitrage to more distant outlets like India.

The rise in shipments to Latin America instead raised the prospect of triggering a build-up of surplus supplies in that region.

Base oils and engine oils exports of more than 1.90 million barrels to Mexico in October rose from less than 1.50 million barrels in six of the previous seven months to a record high.

The rise in shipments contrasted with a sustained fall in Mexico’s lube consumption over the past year to recent levels around 350,000 barrels/month.

The wide disconnect between US export volumes to Mexico and the country’s domestic lube consumption suggested a large portion of the supplies were being consumed through non-lubricants applications.

US base oils exports of 326,000 barrels to Brazil in October were the highest in four months.

The rise in shipments coincided with a jump in Brazil’s domestic base oils output in October.

The combination of higher domestic output and a pick-up in shipments from the US raised the prospect of Brazil’s supply outpacing demand during the fourth quarter of the year.

US base oils exports of more than 60,000 barrels to Argentina in October were the highest since January.

The rise in shipments to Argentina contrasted with the country’s unusual export of surplus base oils cargoes in October amid moves to trim inventory levels.

The rise in shipments from the US could complicate those moves.