South Korea’s April base oil output slips

South Korea’s base oils output held in a narrow range in April, even with the start of scheduled plant maintenance work.

Output of 2.81mn bl (395,920t) in April fell by 4pc from 2.93mn bl the previous month, according to the Korea Petroleum Association (KPA). Production has mostly held within that narrow range for the past five months.

Production levels remained some 15pc down from their peak of 3.32mn bl in the middle of last year.

The lower production since then coincided with some plant maintenance work and lower run rates because of squeezed margins.

The pressure on margins has extended into this year as Asia-Pacific base oil prices struggled to keep pace with surging crude and diesel prices. Weak Chinese demand has exacerbated the pressure on South Korean refiners.

Strong demand and high prices in more distant overseas markets like Europe and the Americas have provided a ready outlet for surplus supplies and helped to support firmer prices.

South Korea’s relatively firm base oils output levels eased concern about the possibility of even steeper run cuts because of low margins.

The steady volumes also highlighted the Asia-Pacific region’s growing role as a key supplier for more distant overseas markets amid rising surplus supply within the region and dwindling production capacity in markets like Europe.