Base oils output rose in March, keeping supply elevated despite lower refinery runs
Strong exports pushed total demand to a four-year high, outpacing supply for the first time in three months
Plant maintenance, lower stocks and a focus on motor fuels output pointed to lower exports in the second quarter
South Korea’s base oils output edged up in March, keeping supply elevated even as the country’s total refinery output fell to a one-year low.
Total output rose to 2.68 million barrels (378,000 tonnes) in March, up from an eight-month low of 2.59 million barrels in February, Petronet data showed.
Output rose 36% year on year and for a fifth straight month, reflecting a prolonged round of production issues and maintenance work during the same period a year earlier.
Lower output early last year added to Asia’s unusually low supply during the first half of 2025.
Persistently higher output in the second half of last year and into early 2026 left the country better positioned to cushion the impact of supply disruptions from the Middle East conflict.
Key Highlights
· Higher March output pointed to limited impact of scheduled plant maintenance that began that month and a rapid recovery from issues that cut production in February.
· Total March supply, or output and imports combined, rose to the second-highest level in seven months.
· Total demand, or domestic consumption and exports combined, rose to the highest level in more than four years amid a surge in shipments to overseas markets.
· Demand outpaced supply for the first time in three months and by the largest volume in a year.
Market Repercussions
Higher output and supply early this year supported a surge in exports in March, helping overseas buyers replenish depleted inventories at the end of the first quarter.
The trend mirrored a similar pick-up in shipments from other key Asian refiners in March, pointing to the still-muted impact of the supply disruptions during that period.
The impact was likely to be more pronounced over the coming months.
Plant maintenance, lower stocks and a focus on maximising motor fuels output pointed to a slowdown in South Korea’s base oils exports from elevated March levels into the second quarter.
Any such slowdown would leave buyers dependent on other sources for replenishment volumes, with shipments from markets such as Taiwan also showing signs of slowing in April.