Close to two-thirds of base oil sold by United States refiners into Mexico is transacted through brokers, according to five industry insiders, and the number is expected to increase as Mexico struggles to cope with Covid-19 and its ailing economy.
Base oil trade through the U.S. border city of Brownsville, Texas, is booming, thanks to growing demand in Mexico and a lack of supply base in that country. Lube Report visited a terminal for an up close view.
Vehicle sales for last year were up in Brazil and Colombia but down in Mexico, Argentina and Chile, according to data from a variety of automotive associations and agencies. The five countries have the largest national fleets among Latin American countries.
A new engine oil standard that takes effect in Mexico in mid-2020 should help promote fair competition in the country's lubricants industry, an industry insider said.
The future of Mexicos state-run base oil plant will be troubled if the government continues to ignore investing in the aging structure, industry analysts said at a conference.
The Mexican government is preparing to publish new national engine oil standards that are modeled on those in the United States and which would replace its own antiquated standards.
Shell was the largest North American lubricants supplier in 2018, beating out ExxonMobil and Chevron, according to consultancy Kline & Co., which also predicts North American finished lube sales will stay flat in the near future.
Shell Lubricants and Comercial Importadora, S. de R.L. de C.V. - known as CISA - recently announced a new joint venture partnership in Mexico that includes investments in existing facilities, increased lubricant production capacity, new marketing capabilities and local workforce training and development.
BASF increased lubricant antioxidant capacity at its Puebla, Mexico, site to keep up with growing demand for additives that lengthen the life of lubricants, the company announced last week. The new capacity of the facility was not disclosed, but the company did say production began last quarter.
Starting next year, passenger car and heavy-duty diesel engine oils sold in Mexico will be required to meet standards that minimize oil degradation, reduce emissions and increase drain intervals. The certification comes at a time when the Latin American country aims to keep unprofessional players off the market.
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