S-Oil boosts base oil run rates in Q4 2021

South Korean refiner S-Oil saw production from its 44,700 b/d base oils units rise in the last three months of 2021 to a record high.

Production climbed as the base oil units’ run-rates rose to 102.4pc in the fourth quarter. The run-rates were the highest in more than nine years.

The refiner’s base oils production capacity was lower than its current levels the last time that run-rates were higher than that.

Strong global base oils demand and high prices incentivized higher production throughout 2021.

Group II prices fell in Asia in the second half of last year as supply tightness eased. But Group II prices held firm in Europe. Group III prices also remained unusually high in all the key markets, and especially the US.

Firm demand and high prices helped to support S-Oil’s operating profit margin from its base oils and lube units at 33.3pc in the fourth quarter of last year.

The margin fell from more than 40pc in the second and third quarters of last year. But before 2020, its operating margin last exceeded the 33pc level in 2016.