S Korea’s Feb base oils exports rebound

South Korea’s base oils exports rebounded in February, boosting regional supply ahead a seasonal rise in demand at the end of the first quarter of the year.

Base oils exports of 371,000 tonnes in February rose from less than 290,000 tonnes in each of the previous two months, government data showed.

Exports rose in February even with scheduled plant maintenance work beginning at the end of that month.

Exports fell in December and January despite the lack of any such scheduled maintenance work.

The rise in shipments in February mirrored a similar pattern in second-half 2024, when exports dipped before maintenance work began on a key Group II base oils unit in South Korea.

Exports then recovered during the maintenance work despite the drop in output.

The earlier drop in shipments partly reflected stock-building to cover requirements during the maintenance work.

The rise in shipments during the maintenance work partly reflected the release of those stocks.

The rebound in South Korea's base oils exports in February, following the recent fall in shipments, pointed to a similar trend.

The dynamic suggested that the market impact of the maintenance work peaked before the plant shutdowns, with supply tightness subsequently easing.

Asia’s Group II base oils prices rose strongly relative to regional gasoil prices over the past two months, adding to signs of tighter supply-demand fundamentals during that period.

The subsequent pick-up in South Korea’s base oils exports in February facilitated regional blenders’ moves to build sufficient stocks to cover the seasonal rise in demand at the end of the first quarter.

Asia's tighter supply fundamentals are likely to ease further in the second quarter of the year following the completion of the plant maintenance work.

Blenders would face less urgency to replenish stocks at that time amid a typical slowdown in consumption at the start of the second quarter.