South Korea’s base oils exports showed a sharp regional divergence in November, with shipments to India sliding to a fourteen-month low while flows to the UAE remained unusually strong.

Exports to the UAE stayed elevated despite easing from October’s record high.

The high volumes pointed to South Korean refiners’ sufficient surplus supply and sustained demand to cover for a drop in availability from Saudi Arabia, where a key unit was offline for maintenance work.

The strong flows, even as South Korea’s total exports dipped, pointed to softer demand in other key markets like India.

The drop in shipments to India reflected such a dynamic.

Key highlights:

·         Base oils exports to the UAE exceeded 34,000 tonnes in November, down from a record-high of more than 45,000 tonnes in October.

·         November volumes were still the second-highest in twenty-one months, signalling sustained demand and sufficient supply.

·         Exports to India fell below 67,500 tonnes, the lowest in more than a year.

·         The slowdown followed unusually high shipments of more than 115,000 tonnes in September and October.

·         Exports to India fell despite rising lube consumption and tight domestic stocks.

Market implications

Plant-maintenance work in Saudi Arabia in Q4 also cut shipments to India, increasing its reliance on alternative suppliers such as South Korea.

The dip in supplies from South Korea to India complicated those moves, raising the prospect of increasingly squeezed stocks amid rising domestic lube consumption.

Such a scenario, against the backdrop of South Korea’s still-high exports to the UAE, suggested that Indian buyers preferred to keep stocks at lower levels.