Latin America's lubricants demand surged to the highest in more than six years as forward buying across Brazil, Argentina, Uruguay and Peru outpaced regional supply
Total supply lagged demand by the largest volume in 29 months, reducing upstream inventory buffers
Strong demand and tight supply increased the region’s reliance on US exports as domestic and overseas buyers competed for its volumes
Latin America's lubricants demand surged in March to the highest in more than six years as widespread forward buying across the region outpaced supply, producing the largest shortfall in nearly 30 months and tightening inventory cover ahead of the second quarter.
The region’s demand rose to more than 240,000 tonnes in March, up 18% year on year and from less than 180,000 tonnes in February to the highest in at least six years, ANP, Ministry of Economy, INEGI and other government data showed.
The demand surge contrasted with rangebound supply, reflecting the faster response of buyers than suppliers to disruptions that emerged from late February across global base oils and feedstock markets.
The imbalance mirrored tightening conditions seen in several major global markets as buyers accelerated procurement amid concerns over availability.
Key Highlights
· The 18% year-on-year demand surge was the sharpest since mid-2021, when a post-pandemic demand recovery drove outsized regional consumption gains, with strong growth from Brazil and Peru to Argentina and Uruguay.
· Mexico’s lubricants consumption rose 1%, lagging the broader regional demand surge.
· South America’s base oils output held at the second-lowest level in 28 months, with February production the lowest during that period.
· Total supply, or output and US base oils exports to the region, fell 7% year on year and for the first time in nine months.
· Total supply lagged demand by more than 30,000 tonnes, the largest deficit in 29 months.
· Excluding Mexico, South America’s supply shortfall was the largest in more than seven years.
Market Repercussions
The March surge left Latin American buyers better stocked heading into the second quarter.
But the large supply shortfall reduced upstream inventory buffers, leaving suppliers with less flexibility to cover replenishment demand or respond to additional supply disruptions.
South America's reliance on US exports for incremental supply compounded the region’s exposure to tightening export availability at a time when domestic US demand and overseas buyers were competing for the same volumes.