SK Lubricants' base oil profit holds firm

South Korea’s SK Lubricants, the base oils and lubricants unit of SK Innovation, saw its profit slip in the first three months of the year from the previous quarter because of rising costs and a lower sales volume.

Operating profit of 211.6bn South Korean won ($167mn) in the three months to end-March fell by 21pc from the previous quarter.

But profit rose from year-earlier levels for a sixth quarter and held above the W210bn level for a fourth quarter. Before the second quarter of 2021, quarterly profit had never exceeded W200bn.

The unit’s profit fell from the previous quarter amid a surge in feedstock costs. Average crude prices rose by 25pc in the first quarter of the year from the previous three months.

European Group III base oil prices rose by 10pc during the same period.

SK Lubricants is the world's largest producer of Group III base oils.

Even with the smaller price increase, the large premium of Group III base oil prices over crude kept the product highly profitable.

Higher base oil prices helped to boost sales to a record-high W1,043bn in the first quarter of the year.

The 0.3pc increase from the previous quarter was smaller even than the rise in base oil prices compared with crude oil prices.

The slower increase in sales coincided with a fall in the producer’s sales volume in the first quarter.