South Korea’s Nov base oils output rises

South Korea’s base oils output recovered to a three-month high in November following the completion of plant maintenance work at the end of the previous month.

The country’s supply-balance showed signs of staying tighter than usual at the end of last year as firm export volumes in October and November slowed the impact of the pick-up in output and recovery in stocks.

South Korea’s base oils output of 2.64 million barrels (371,100 tonnes) in November rose from a six-month low of 2.43 million barrels in October, industry data showed.

The volume was still down from typical levels of 2.73 million barrels/month (384,000 tonnes/month) in the four months to August, before maintenance work began on a key Group II base oils unit in second-half September.

Output stayed lower than usual even with a sustained rebound in base oils exports in October and November.

The dynamic slowed the pace of a recovery in stocks at the end of last year.

A slower pick-up in surplus supplies in turn curbed the pressure on South Korean refiners to adjust prices to clear any surplus late last year and early this year.

Asia’s Group II base oils prices, and especially heavy-grade prices, stayed firmer than usual relative to gasoil prices in the fourth quarter of last year, reflecting that dynamic.

The region’s base oils prices often face more pressure during the final months of each year as refiners typically adjust prices to facilitate the removal of surplus volumes.

Another major Group II plant in South Korea is set to be taken offline for maintenance work starting at end-February.

The shutdown raised the prospect of keeping supply lower for longer.

The maintenance work in second-half 2024 had the largest impact on South Korea’s base oils exports in the month of September, even as the impact on output peaked in the month of October.

The drop in exports in September reflected moves to build stocks to cover for the sharper drop in output in October.

Any repeat of that scenario early this year for the same reasons would see exports facing the largest impact in the month of February, before a likely sharper drop in output in the month of March.