Latin America’s lubricants demand fell to a 26-month low in February, curbing requirements for replenishment base oils supplies even as availability rose, leaving the region better cushioned to absorb supply disruptions in the months that followed.

Lubricants consumption fell to less than 180,000 tonnes in February, down from closer to 190,000 tonnes in January and slipping year on year for a fourth straight month, ANP, INEGI, Ministry of Economy and other government data showed.

Demand extended its decline as weaker consumption in markets such as Brazil and Argentina outweighed a recovery in Mexico.

Weaker demand contrasted with a sustained rise in US base oils exports to Latin America, widening the regional surplus. The diverging trends left the region better placed to absorb global supply disruptions from late-February.

Key Highlights

·         Regional base oils output fell to a 28-month low amid production issues in Brazil.

·         US base oils exports to Latin America rose 31% year on year, increasing for an eighth straight month and offsetting lower regional output.

·         Regional supply, or output and US exports to Latin America combined, exceeded demand for an eighth straight month, with the surplus close to the second-highest level in more than two years.

Market Repercussions

US base oils and lubricants shipments to South America extended their rise in recent months even as total US exports slumped from mid-2025.

South America provided an outlet to offset weaker flows to Mexico during that period.

Rising shipments contrasted with weaker demand, leaving a growing surplus and pointing to a slowdown in import requirements at the same time as seasonal demand in the US curbed export volumes.

Supply disruptions from end-February instead flipped the surplus from an overhang into a buffer against tightening global availability.