Argentina's base oils supply fell to a seven-month low in June as imports from the US almost disappeared
Domestic production covered a larger share of supply, while weaker lubricants demand reduced import requirements
The balance was sufficient for Argentina to resume exports in early July despite the sharp fall in imports
Argentina's base oils supply fell to a seven-month low in June as imports from the US almost disappeared, but weaker domestic demand allowed local production to cover much of the shortfall.
Total supply, comprising domestic output and imports, fell to about 10,500 cubic metres (9,300 tonnes) in June, the lowest since November, Ministry of Economy data showed.
Domestic output slipped to 10,100 cubic metres from 11,800 cubic metres in May, while imports almost disappeared, falling below 500 cubic metres from more than 8,200 cubic metres a month earlier.
The fall marked a shift in Argentina's supply mix rather than a shortage. Domestic production accounted for 78% of total supply during the second quarter, up from 69% in the first quarter and the highest share in almost six years.
Weaker lubricants demand also softened the impact of lower supply. Buyers had less need for imported barrels as consumption eased in May and June, increasing the attraction of readily available domestic production.
Key Highlights
Domestic output rose to its highest quarterly level in a year despite lower total supply.
Total imports fell to their lowest quarterly level since the third quarter of 2020, while imports from the US fell to their lowest in at least four years.
Base oils exports resumed in July despite lower supply.
Market Repercussions
Argentina and Brazil responded very differently to a tightening US market. Brazil sharply increased imports from the US during the second quarter to cover refinery maintenance, while Argentina relied increasingly on domestic production as imports declined.
The shift reduced Argentina's exposure to overseas supply disruptions at a time when buyers elsewhere remained vulnerable to tighter US spot availability and hurricane-season risks. Domestic production also gave buyers greater flexibility to keep inventories lower while still meeting demand.
Imports fell sharply, domestic production filled most of the gap while softer demand reduced requirements, leaving enough surplus for exports to resume to Brazil in early July.
That flexibility would leave Argentina better positioned if US export volumes lagged expectations in the coming months.