South Korea's base oils exports to the Americas surged to a record high in July, driven by a US Group III shortfall and open Group II arbitrage to South America
Exports to the US reached their highest level in almost four years, while shipments to Brazil hit a record
A wave of plant maintenance in Asia and the Middle East could curb the volumes available for the Americas
South Korea's base oils exports to the Americas surged to a record high in July, as refiners leaned on both a Group III shortfall in the US and a widening Group II arbitrage opportunity in South America.
Exports to the Americas rose to more than 105,000 tonnes in July, up from 71,200 tonnes in June, Korea Customs Service data showed. It was only the second month in which shipments exceeded 100,000 tonnes.
Shipments to the US accounted for most of the increase in May and June, before extending their rise in July to the highest since September 2022. The shipments are helping offset the loss of Middle East Group III supplies while tapping into elevated US Group III prices.
The July increase also included a surge in exports to Latin America, led by record-high shipments to Brazil.
The rise in flows to that region pointed to a pick-up in Group II arbitrage activity, with US prices carrying an unusually wide premium over Asia while Asian suppliers had more spare material available.
Key Highlights
· Exports to the Americas over the three months to July reached close to 266,000 tonnes, nearly double the 135,100 tonnes shipped in the same period a year earlier.
· Exports to the US topped 86,000 tonnes, up from average monthly levels of 62,000 tonnes during the previous four months and less than 45,000 tonnes in 2025.
· Shipments to Latin America surged to more than 19,300 tonnes, a record, from less than 5,000 tonnes a month in each of the previous five months.
Market Repercussions
The Americas market has grown more reliant on South Korea to plug the US Group III shortfall and the Latin America Group II arbitrage, increasing the importance of steady flows from the Northeast Asian country.
The US itself remains structurally short of Group III, even with South Korea's surge in shipments. That is pushing the US to lean more on domestic production to meet demand, keeping the country's own Group II supply tight and its prices at levels that keep the arbitrage from Asia open.
Those arbitrage flows could get harder to sustain, with a round of Group II plant maintenance in Asia and the Middle East set to begin at the start of the fourth quarter, while several Group III units undergo maintenance in the third quarter.
The maintenance will leave less surplus available from Asia, adding to the market’s reliance on South Korean supply staying elevated to sustain higher export flows to the Americas.