South Korea's base oils exports rose in June as buyers across Southeast Asia turned increasingly toward South Korean supply to offset weaker shipments from Singapore.

Exports climbed to 381,000 tonnes in June from 314,000 tonnes in May, Korea Customs Service data showed. Shipments rose 7% from a year earlier and exceeded the previous year's average monthly level after South Korea's output rebounded sharply in May.

Southeast Asia absorbed almost all of the gain.

Exports to the region surged to more than 108,000 tonnes, the highest since January 2020 and only the second month above 100,000 tonnes during the past three years.

The timing lined up with Singapore's own export slump in May and June. Rather than signalling stronger regional demand, the surge pointed to buyers replacing shipments that had previously originated from Singapore.

South Korea's growing surplus supply from May allowed refiners to step in and cover some of the shortfall.

Key Highlights

·         Shipments to Singapore more than doubled from typical levels to the highest since January 2020.

·         Exports to Indonesia climbed to the highest since March 2022, eroding Singapore’s growing share of that country’s imports.

·         Northeast Asia and Southeast Asia together absorbed almost half of South Korea's exports in June, extending a steady increase in the share of supply remaining within Asia.

Market Repercussions

South Korea's expanding role increasingly positioned it as the market's most important swing supplier while Singapore's exports remained unusually low.

That shift helped to partially stabilise regional availability following both the direct loss of Middle East Group III supply and the indirect tightening caused by Singapore's feedstock constraints.

It also created an opportunity for South Korean refiners to expand market share following concerns earlier this year that rising regional production would erode their export position. Prolonged weakness in Singapore's exports would increase the likelihood of such a shift holding.

Whether South Korea can sustain that swing-supplier role will increasingly depend on production remaining elevated, especially if Singapore's own recovery takes longer than expected.

With Taiwan's exports also lower and additional maintenance scheduled elsewhere in Asia during the coming months, regional supply could still prove tighter than expected even with South Korea’s higher exports.