S Korea’s base oil exports to Europe fall

South Korea’s base oil exports to Europe fell less sharply than to other regions in June amid signs that producers were targeting markets where prices were higher.

Total exports of 15,740t in June fell from 24,630t the previous month, government data showed. The volume was close to typical levels of close to 16,000 t/month over the past six months.

South Korea’s base oil exports to Europe have been trending lower this year amid healthier regional availability of Group III base oils.

That trend, and higher US prices for Group III supplies, prompted South Korea to boost shipments to that market instead.

A swathe of Group II shipments from US to Europe and unusually high freight rates complicated further the feasibility of moving more supplies to the region from northeast Asia.

Even so, the relatively steady flow of shipments to Europe in June contrasted with the fall in South Korea’s total base oil exports that month to their lowest in more than two years.

The sharp slowdown in total shipments mostly reflected a slump in exports to buyers in the Asia-Pacific region.

Base oil prices in Europe have risen sharply this year to a widening premium to crude and diesel prices. Base oil prices in Asia-Pacific have risen less sharply, squeezing their premium to crude and diesel.

The stronger prices in the Americas and in Europe incentivized Asia-Pacific refiners to boost shipments to those more distant markets.

The flow of South Korea’s base oil shipments in June highlighted that trend.