South Korea’s SK Enmove, the world’s largest producer of Group III base oils, saw profit fall in the final three months of the year from the previous quarter as a seasonal slowdown in demand cut sales volumes.Profit margin held firm amid more muted downward pressure on Group III base oils prices compared with other grades.The firm profit contrasted with a loss for parent company SK Innovation’s refining, petrochemicals and battery units.The producer, formerly known as SK Lubricants, forecast firm margins in 2023 as an expected drop in availability of unconverted oil cuts feedstock supply to produce premium-grade base oils.The refiner’s operating profit of 268.4 billion South Korean won ($213.4mn) in the three months to end-December rose by 0.3pc from year-earlier levels on the back of a 25pc rise in sales..Profit fell by 20pc from a record-high W336bn in the third quarter amid an 8pc fall in sales.Profit fell faster than sales as base oils values eased relative to feedstock crude prices.The premium of European Group III prices over crude averaged more than $1,120/t in the fourth quarter of the year, versus more than $1,260/t during the previous three months.But Group III prices held firm relative to gasoil and relative to other base oils grades.European prices got support from tighter regional supply because of plant maintenance work and a slump in shipments from the Mideast Gulf.SK Enmove booked inventory losses to reflect the lower outright prices. The losses outweighed the support from still-firm margins.SK Enmove’s sales volume also fell in the fourth quarter at a time of year when demand typically slows.The drop in sales volume mirrored a similar fall in South Korean refiner S-Oil's supplies and added to a widespread drop in exports in the Asia-Pacific region in the fourth quarter of the year..S-Oil's Q4 base oils profit stays high.With costs rising faster than sales, SK Enmove’s fourth-quarter operating profit margin came to 20.7pc.The margin was down from 23.75pc during the previous three months and from 25.75pc in the fourth quarter of 2021.The profit margin held above 20pc for an eighth straight quarter. Before 2021, the margin had exceeded the 20pc level just three times over the previous decade..S Korea’s Dec base oils exports fall
