Argentina's lubricants demand fell in June for a second straight month, while base oils exports stayed near zero
First-half demand edged higher despite volatile monthly swings, echoing a similar trend in broader economic activity
Export cargoes resumed to Brazil in early July, continuing Argentina's pattern of alternating spot shipments between Brazil and Nigeria
Argentina's lubricants demand fell further in June as base oils exports remained near zero for a second straight month despite sufficient domestic supply.
Lubricants demand fell 9% year on year to 18,100 cubic metres (16,000 tonnes) in June, Ministry of Economy data showed. It was the second consecutive annual decline after four straight months of growth through April.
The slowdown continued to unwind the stronger purchasing seen during March and April, when buyers built inventories amid concerns over higher prices and supply security following disruptions across the Middle East.
Base oils exports fell to less than 150 cubic metres in June, extending the near-complete pause that began in May.
Sufficient supply and weaker demand would typically have supported a pick-up in exports. Shipments stayed paused anyway.
Key Highlights
· Automotive lubricants demand fell 5% in June, while industrial lubricants consumption declined 16%.
· Second-quarter demand fell 1% from year-earlier levels, after first-quarter demand rose 4%.
· First-half demand still rose 1% from a year earlier despite the weaker second quarter, suggesting underlying consumption remained relatively steady even as monthly buying patterns turned volatile.
Market Repercussions
Domestic demand weakened in June, but exports stayed near zero for a second straight month despite sufficient supply.
The signs of caution pointed to a market still balancing supply security against the cost of holding inventories.
Argentina is less exposed to overseas supply disruptions than neighbouring countries because it covers a larger share of its own requirements. But recent market volatility increased the incentive to maintain sufficient domestic inventories.
When exports finally resumed in July, the repercussions extended beyond South America.
The cargoes moved to Brazil, where refinery maintenance increased requirements, rather than to Nigeria, which had been the destination for Argentina’s shipments at the start of the year.
That left Nigeria more reliant on an already tight US market after spot shipments from the US slowed during the second quarter.
The July cargoes to Brazil ended Argentina's export pause. They also exposed the Americas' shortage of spot supplies.