South Korean refiner S-Oil saw profit from its base oils and lube unit rebound in the fourth quarter from the previous three months on the back of rising prices and lower feedstock costs.
Profit fell from year-earlier levels, when global Group III base oils prices were unusually high.
The unit’s profit margin remained lower than in 2021 and 2022 but much higher than during the decade to 2020.
The firm margins highlighted the sustained profitability of the refiner’s base oils operations, especially compared with its refining and petrochemicals units.
The base oils and lube unit’s operating profit came to 226.2bn South Korean won ($169mn) in the three months to end-December.
Profit rose by more than 50pc from the previous quarter and outpaced the 24pc rise in sales.
Revenue rose amid higher base oils prices and rebounding sales volumes.
Asia’s Group II base oils prices rose by 4pc in the fourth quarter from the previous three months, ICIS data showed.
Sales volume rose as higher run-rates boosted production by 50,000t from the third quarter and by more than 150,000t from the second quarter.
Output fell at that time because of scheduled plant maintenance work.
Higher sales contrasted with lower feedstock costs.
Crude oil prices fell by 5pc in the final three months of the year from the previous quarter.
Rising sales and falling costs boosted the base oil unit’s operating profit margin to 27pc in the fourth quarter, up from 21.8pc during the previous three months.
The base oil unit’s profit exceeded S-Oil’s refining profit for the tenth time in the last sixteen quarters.
The unit’s profit outperformed the refining unit even with sales accounting for less than 10pc of total revenue.
The refining unit’s sales typically account for more than 75pc of S-Oil’s total revenue.