Korea’s base oil exports to Europe rise

South Korea’s base oil exports to Europe rose in May to a seven-month high amid signs of a pick-up in arbitrage shipments to the region.

Total exports of 24,630t to Europe in May more than doubled from 9,130t the previous month to the highest since last October, government data showed.

The volume compared with typical exports to Europe of around 9,000 t/month.

Most of the shipments bound for Europe each month move to Belgium and the Netherlands. Most of those volumes likely consist of term shipments of Group III base oils.

That trend repeated itself in May. A total of some 15,790t of supplies moved to those two markets during the month, up from less than 10,000t in April.

The share of supplies moving to those two markets accounted for some 64pc of total shipments to Europe in May. The share is typically more than 80pc.

The smaller share in May likely reflected a pick-up in arbitrage shipments to other outlets in Europe.

That arbitrage was increasingly feasible as surging European base oil prices in recent months widened sharply their premium to fob Asia prices. Tight availability in Europe added to the attraction of tapping more supplies in Asia-Pacific.

The May volumes to Europe included a 4,000t shipment to France. Such shipments to that market have taken place every few months.

The May volume also included a 4,030t shipment to the UK. There has been no shipment like to that the UK in more than a decade.