S Korea’s June exports to Asia fall

South Korea’s base oil exports to Asia-Pacific buyers fell in June to the lowest in more than four years amid weak Chinese demand and resistance to higher prices.

Base oil exports of 121,600t to the region in June fell by 35pc from 186,330t the previous month, government data showed.

The volume was the lowest since fourth-quarter 2017.

The volume was lower even than when plant maintenance work cut South Korean base oil production and exports at various times during the intervening years.

The 36pc slide in June exports from year-earlier levels also outpaced the 22pc contraction in South Korea’s total base oil exports that month.

The steeper drop in exports partly reflected a slump in shipments to China to a nine-year low of less than 40,000t.

Base oil exports to China extended their fall even as economic activity in the country revived in June following the relaxation of strict lockdown restrictions in key commercial centres like Shanghai.

Domestic base oil prices in China remained at a steep discount to regional prices even as activity revived.

The lower prices, and uncertainty about the prospect and timing of any further lockdowns, cut the attraction of moving more supplies to China.

Base oil exports also fell sharply to southeast Asia. Economic activity in the region has revived this year following the steady relaxation of lockdown restrictions.

Exports to the region fell by 36pc in June from year-earlier levels to a five-month low of 58,440t.

The slowdown to southeast Asia likely reflected moves to limit term and spot shipments linked to regional prices that were unusually weak relative to crude and diesel prices.

The low margins incentivized refiners to focus on maximizing middle distillates production instead.