Base oils exports to India fell to a three-month low in February, well below typical levels, while Middle East flows held near their monthly norm
A diverted cargo and weaker first-half March loadings point to a sudden shift in trade flows following the outbreak of war
Surging diesel prices and feedstock disruption raise the prospect of lower run rates, tightening South Korean supplies available for both markets
South Korea’s base oils exports to India fell to a three-month low in February while shipments to the Middle East held firm, before the outbreak of war in the Middle East forced a sudden shift in trade flows likely to extend through March.
Total base oils exports to India fell to 74,000 tonnes in February, dipping from more than 100,000 tonnes in each of the previous two months and from typical levels of around 99,000 tonnes in the year to January, Korea Customs data showed.
The low export volume contrasted with firm domestic demand in India that complicated blenders’ moves to build inventories ahead of peak seasonal consumption.
South Korean refiners now faced pressure to redirect supplies that had been lined up for the Middle East, in a shift that could provide short-term relief to India's tight market provided run rates hold.
Key Highlights
· Exports to the Middle East came to 27,000 tonnes in February, down from 31,000 tonnes in January but close to typical monthly levels of around 28,000 tonnes over the past year.
· A large cargo reached the UAE in late February after loading from South Korea at the beginning of that month.
· Another shipment discharged supplies in India in late February before heading to the Middle East, then diverting from the region.
· Cargo loadings from South Korea for India and the Middle East remained lower than usual in first-half March.
Market Repercussions
India would be a natural outlet for February-loading shipments from South Korea that were bound for the Middle East but had yet to reach their destination by month-end.
India could also absorb some regular monthly volumes typically shipped to the Middle East, partly easing its tight supply-demand balance.
The option assumed South Korean refiners maintained base oils output at pre-March levels.
Rising crude and diesel prices, alongside disruptions to feedstock supply, raised the prospect of lower run rates, cutting the volume of supplies available to either market.
Any reduction would limit surplus volumes to redirect, easing the pressure to find alternative outlets while tightening supply to India.