S Korea’s January Exports To US Rise, Brazil At 13-Month High

South Korea’s base oils exports to the US rebounded in January, recovering from a twenty-month low in December and adding to steady Middle East flows to the US market.

Total base oils exports to the US rose to 55,000 tonnes in January,  up from 22,000 tonnes in December but below November’s twelve-month high of 59,000 tonnes, Korea Customs data showed.

The January recovery brought shipments closer to more typical levels despite weak US Group III base oils prices that incentivized overseas refiners to move more shipments to Europe.

Key Highlights

·         Volatile export flows since late last year masked average monthly levels of 45,000 tonnes over the past three months, close to the 2025 norm of around 43,000 tonnes/month.

·         Steady South Korea volumes added to a recovery in Middle East shipments since the third quarter of last year, keeping the US Group III market well supplied.

·         Shipments from South Korea and the Middle East to the US showed signs of slowing so far in February, raising the prospect of a dip in cargo arrivals towards the end of the first quarter.

·         South Korea’s January base oils exports to Brazil rose to 6,300 tonnes, the highest level in thirteen months and extending a trend of increasingly regular shipments to the South American country since mid-2025.

Market Repercussions

Any extension of the slowdown in shipments from South Korea and the Middle East in the coming weeks could tighten US Group III availability at the start of the second quarter — a  period that typically sees a seasonal pick-up in demand.

Flows from South Korea to Brazil gathered pace in recent months even though the Asia-to-Americas arbitrage appeared closed on paper.

But the premium of Asia Group II heavy-grade prices to US export prices narrowed steadily since mid-2025, falling in February to its tightest level in more than a year. The narrower differential improved the viability of arbitrage flows.

A sustained rise in shipments to South America would increase competition in a key outlet for US refiners at a time when they faced a marked slowdown in exports to other major markets like Mexico and India.