S Korea’s Dec exports to Americas fall

South Korea’s base oils exports to the Americas fell in December amid a slowdown in Group III shipments to the US and a drop in arbitrage flows to Latin America.

The drop in shipments coincided with and helped to balance out a seasonal slowdown in US demand during the winter months.

Lower base oils production in South Korea and the Asia-Pacific region during the fourth quarter of last year also curbed the volume of surplus supplies for markets like Latin America.

Signs of improving demand in China and tighter Group III base oils supply in Europe also triggered steady or higher flows to those markets.

Demand from China is likely to increase further over the coming months as its economy revives after the scrapping of its zero-Covid policy.

That trend, combined with signs of slowing economic growth in the Americas, raised the prospect of a slowdown in shipments to the region over the coming months.

Total exports of 55,220t to the US in December fell from more than 78,000t the previous month and by 24pc from year-earlier levels, government data showed.

Even with the year-end slowdown, total shipments of 737,990t to the US in 2022 rose by 6pc from 693,210t the previous year.

The volume rose even as South Korea’s total base oils exports fell by 11pc in 2022.

The rise in shipments tapped the US’ strong demand and firm prices for Group III base oils compared with other regions.

The shipment of several large cargoes from South Korea to the US in January pointed to a continuation of that trend.

South Korea’s base oils exports to Latin America slowed even more sharply in December to less than 2,500t.

Exports of 11,990t to the region in the final three months of the year slowed from almost 30,000t during the third quarter.

The wave of arbitrage cargoes during the third quarter provided buyers in markets like Argentina with alternative supplies to shipments from the US.

The cargoes also cleared a large overhang of surplus volumes from South Korea.

More manageable supplies and signs of a pick-up in demand from China were likely to curb any sharp rebound in arbitrage shipments to Latin America over the coming months.