South Korea’s base oils exports rose to a three-month high in January, helping to absorb surplus supply after elevated late-2025 production and signalling more balanced domestic fundamentals ahead of planned maintenance.

Total base oils exports rose to 365,000 tonnes in January, up from less than 350,000 tonnes in December and by 29% year on year, Korea Customs Service data showed.

The annual increase was the fourth in five months and helped offset unusually high base oils output at the end of last year, keeping domestic stocks more balanced.

Key Highlights

·         Exports to China reverted to more typical levels in January after surging to a ten-month high in December.

·         Steady shipments to China coincided with a pick-up in Taiwan’s January base oils exports to China to a ten-month high, and a rise in China’s domestic output to a near five-year high.

·         Shipments to southeast Asia climbed to a three-month high, with the volume well above typical monthly levels seen over the past year.

·         The increase followed firm year-end consumption that left demand outpacing exports to the region for a second straight month.

Market Repercussions

More balanced supply-demand fundamentals in South Korea would precede planned maintenance work on a key Group II unit starting in second-half March, alongside weaker base oils margins in recent weeks and a typical seasonal rise in demand towards the end of the first quarter.

Improved inventory levels, pre-maintenance stock-building, and price signals that incentivized refiners to limit surplus output could curb pressure to accept prices that they deemed to be too low.

Even so, broader regional demand strength could be more muted in China, where elevated domestic output and steady regional inflows, including from South Korea, likely left blenders with healthy stocks to tap after the Lunar New Year holidays.