Latin America’s lubricants demand fell in January for a third straight month as consumption in Mexico resumed its slide, offsetting steady-to-firm demand in other markets such as Brazil and Argentina.

Total lubricants consumption reached more than 185,000 tonnes in January, down 4% year on year, according to Ministry of Economy, ANIQ, ANP and other government data.

Lower demand contrasted with elevated supply from regional refiners and increased shipments from the US, whose higher exports helped limit a supply-build in its domestic market at the turn of the year.

That need for outlets was now likely to reverse as a seasonal pick-up in US demand and pressure on refiners to maximise motor fuel output raised the prospect of a tighter supply balance.

A more marked shift in US fundamentals could leave Latin American supply struggling to match demand.

Key Highlights

·         Mexico’s January lubricants demand fell 13% year on year, reversing December’s recovery amid weaker automobile oils consumption.

·         Mexico’s total base oils imports equalled 95% of US exports to the country in January, up from less than 40% during most of the year before June 2025.

·         The supply convergence and steadier US exports to Mexico in recent months suggested the slump in US shipments since mid-2025 had bottomed out.

·         Argentina’s lubricants demand rose 3% year on year, while Brazil’s consumption steadied.

·         Latin America’s base oils supply, or regional output and US exports to the region combined, rose more than 20% year on year, marking the seventh straight monthly increase.

·         Base oils supply exceeded lubricants demand for a seventh straight month, though the surplus narrowed.

Market Repercussions

The slump in US base oils exports to Mexico during the second half of last year triggered a search for alternative outlets and a surge in shipments to South America.

Rising supply contrasted with softer demand, adding to the regional surplus.

Those fundamentals now showed signs of reversing.

Global supply disruptions shifted the US market balance, with refiners now focused on meeting domestic and term demand rather than clearing surplus volumes.

Any slowdown in US exports to South America would follow signs of steadier consumption in some of the region’s largest markets, tightening the regional supply-demand balance.

Tighter fundamentals would increase pressure on local refiners to sustain higher output levels.