Base Stocks

Brazilian Car Parc Drives Base Oil Demand


Brazilian Car Parc Drives Base Oil Demand
© Lianez; mamanamsai

According to the Lubes’n’Greases Global Base Stock Plant Guide 2023, Brazil houses three major base oil plants and one rerefinery. Of those facilities producing virgin base stocks, only one outputs naphthenic base stocks, while the others produce mostly API Group I oils. 

Below is a list of the major base oil plants in the country, along with their ownership and production capacities:

  • The base oil plant at the Duque de Caxias Refinery, known as Reduc, is owned by state oil company Petrobras. The plant has annual Group I production capacity of 584,000 tons per year.
  • The Lubnor base oil plant, also owned by Petrobras, is located in Fortaleza, in the northeastern state of Ceara. Formerly named Refinaria Lubrificantes e Derivados do Nordeste, or Northeastern Lubricants and Derivatives Refinery, it has 68,000 t/y annual naphthenic base stocks production capacity.
  • The base oil plant at Mataripe Refinery in Sao Francisco do Conde is owned by Mubadala Investment Co. and operated by its Acelen subsidiary. Its annual Group I production capacity is 91,000 t/y.
  • The rerefinery in Lencois Paulista is owned by Lwart. It currently has capacity to produce 1,550 barrels per day of rerefined Group II base oils, but the company is reportedly planning an expansion of the plant’s capacity. 

Brazil’s base oil producers do not currently make enough volumes to support its appetite, and the country has been reliant on imports, mostly from the United States, for some time. In fact, while it may be too early to make any definitive conclusions, it appears that Brazil’s domestic base oil production is slipping, while import activity in the country is consequently ramping up. 

From January through November last year, Brazil’s base oil production declined 11% to 416,000 tons, compared to 467,000 tons the year before. Meanwhile, Brazil’s base oil imports during the same 11-month period rose 6% to 750,000 tons, compared to 705,000 tons in 2022.

The Brazilian Car Parc

At nearly 38 million passenger vehicles, Brazil possesses the first largest car parc in South America and the sixth largest in the world. Furthermore, the country is the eighth largest vehicle producer in the world—it output about 2.4 million units in 2023—and the seventh largest market for new vehicle registrations. 

Not surprisingly, the vast majority of vehicles in the country are powered by internal combustion engines (ICEs). While alternative technologies, such as hybrid electric vehicles and battery electric vehicles, are expected to increase in popularity in the country in the coming years, industry experts predict that the country’s car parc will remain largely ICE-powered for some time. 

Notably, about 75% of the passenger car fleet in Brazil is powered by “flex” internal combustion engines, Iconic Base Oil Executive Manager Marcelo Guimaraes told attendees at the ICIS Pan-American Base Oils and Lubricants Conference held in Jersey City, New Jersey, in early December last year. This means that the owner of the car has the choice to fuel it with gasoline or ethanol. 

Base Oil Demand Shifts

Brazil’s growing car parc as well as advances in vehicle technology have necessarily reshaped base oil demand in the country over the past few years, and this is a trend that many industry players believe is likely to continue. 

In fact, Iconic’s Guimaraes expects Brazil to steadily increase its appetite for Group II and Group III base stocks over the next few years. He attributed this looming shift to a rise in automobile production, more stringent emissions regulations as well as a need to increase the supply of premium lubricants in the country to meet the demands of newer engine technology. Meanwhile, Group I demand is forecast to recede. 

Of course, it would be difficult to understand base oil demand dynamics in Brazil without also understanding the finished lubricants landscape. So who are the major players in the country? Which types of products are needed most? And how does all of that affect current and future base oil demand?

Lubricant market share in Brazil is distributed fairly unevenly. Nearly two-thirds of lubricant volume is dominated by the country’s major players. These include suppliers like Iconic, Vibra, Moove, Petronas, Shell, Castrol and Total. The remaining 35% of market share in Brazil is distributed among the smaller players, both local and international. 

With such a large vehicle population, the activities of the lubricant marketers in the country are primarily focused on meeting the needs of the automotive industry. Lubricant products geared toward passenger cars and motorcycles account for more than a quarter of the market (27%). Not surprisingly, industrial applications follow closely at 24%, then heavy-duty diesel applications at 23%, driveline fluids at 22% and non-segmented applications at 4%.

As new cars replace old ones and overall engine technology in the country becomes more sophisticated, growing demand for premium automotive lubricants is likely to bring about an increase in requirements for higher-performing base oil grades. As mentioned above, Brazil’s domestic base oil production consists mostly of Group I oils and a very small portion of Group II base stocks. The country imports significant volumes of Group I base oils, even larger volumes of Group II cuts and some, albeit not as many, Group III grades. 

The majority of base oil imports are purchased and used by the five largest lubricant manufacturers, Guimaraes said.

By the end of 2023, Brazil’s demand for Group I base oils grew by 0.6%, while Group II soared by 6.3% and Group III by 4.8%, Iconic estimated. In the next four or five years, Group I demand will likely remain flat, Group II demand will grow quickly, and Group III consumption will likely keep pace.

Adherence to newer heavy-duty engine oil categories may also affect base oil demand in Brazil. Some lubricant producers in the country use Group I base oils to manufacture API CI-4 lubricants. However, a shift from CI-4 to CK-4 oils “means that Group II base oils will need to be used,” Guimaraes said.

Looking into the future of the base oils and lubricants industry in Brazil, Guimaraes projected that lubricants produced for ICE-powered equipment will last longer than they will in regions that are expected to adopt electric vehicles at a quick rate (e.g., China, the United States and countries in the European Union). Other progress will still be made to meet lower emissions goals, but there are likely some major advances ahead for automotive lubricants that will inevitably affect the country’s base oil landscape.

“Base oils have the most to contribute to the upgrade of the Brazilian lubricant market,” Guimaraes said.  

Gabriela Wheeler and George Gill contributed to this article. 

Sydney Moore is managing editor of Lubes’n’Greases magazine. Contact her at