Base oil traffic from the United States to Mexico has been disrupted in recent weeks by new Mexican rules aimed at keeping specialty oil products from being fraudulently used as fuel.
U.S. base oil marketers said shipments started being blocked around the beginning of May, when Mexico began enforcing a law requiring importers of all refined products to obtain permits that describe the material precisely. The requirement was one of a series of measures adopted last November.
You had some companies that moved quickly to get their permits, one marketer said. Some did not, and theyre having problems because the government is enforcing this pretty strictly.
Sources said the disruption has been significant but that traffic should return to normal as more importers obtain permits.
The new regulations were part of an effort to crack down on importation of fuels registered as other types of refined products, as well as specialties that were used as diesel fuel. National oil company Pemex and its franchises have exclusive rights to sell fuel in Mexico. Fuel imports are subject to a large tax, which makes base oils and other products much cheaper. Fuel in Mexico is also significantly more expensive than in the United States.
The U.S. base oil market remained quiet the past week. Group III marketer Lithcon announced that it is raising both of its postings by 5 cents per gallon, effective July 1, but other principal suppliers maintained their Group I and Group II posted prices.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.
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