South Korea’s SK Lubricants, the world’s largest producer of Group III base oils, saw profit rise to a record high in the third quarter and account for almost half of parent company SK Innovation’s total profit.SK Lubricants’ operating profit of 336bn South Korean won ($236mn) in the three months to end-September rose from W255.2bn during the second quarter and by 2pc from year-earlier levels.Profit rose 32pc from the second quarter even as the unit’s sales volume fell.Strong sales prices and lower costs more than made up for the drop in volumes.SK Lubricants’ 15pc rise in sales from the second quarter lagged the pace of the rise in profit, reflecting the lift from lower feedstock costs..European Group III base oils prices remained unusually high in the third quarter even as they edged down by 7pc from the previous three months. US Group III prices were even higher.The firm prices contrasted with a 14pc fall in crude oil prices during the third quarter from the previous three months.Group III price premiums to Group I and Group II prices also rose during the third quarter, reflecting the steeper fall in prices of the other grades.The relative strength of Group III prices reflected sustained firm demand for the premium-grade base oils, especially in the US.Supply also tightened because of plant maintenance work in Europe and Mideast Gulf. Supplies from Indonesia also dipped.Rising sales and lower costs boosted SK Lubricants’ operating profit margin to 23.8pc in the third quarter of the year, up from 20.8pc during the previous three months.The margin was down from more than 28pc in 2021, when base oils prices were also unusually high. But feedstock costs were much lower.SK Lubricants’ sales accounted for 6.2pc of SK Innovation's total sales. Its profit accounted for 48pc of the company’s total profit.SK Innovation saw downward pressure on base oils sales prices in the fourth quarter because of a seasonal slowdown in demand. But feedstock supply to produce Group III base oils was expected to be limited as refiners focused on maximising diesel production..SK Lubricants’ Q2 profit rises
