S. Korea’s Feb exports to SE Asia rise

South Korea’s base oils exports to southeast Asia rose to a four-month high in February even as its shipments to China surged.

The simultaneous rise in shipments to both southeast Asia and China suggested that supply remained sufficient to cover strong demand in both markets.

Regional base oils prices held in a relatively narrow range since the start of the year, adding to signs of sufficient supply even with a recovery in Chinese demand.

The southeast Asian market had provided a key outlet for South Korean producers last year in the face of slumping Chinese demand.

Rising base oils demand in markets like Indonesia added to the region’s attraction.

An expected recovery in Chinese demand this year had raised the prospect of a rise in competition for regional supplies.

Such a scenario would give base oils producers more leverage to target higher prices.

The region’s steady prices so far this year suggested any such leverage remained muted.

An increase in refiners’ leverage also partly depended on the sustainability of the revival in Chinese demand.

A rebound in the country's economic activity would help to sustain the rise in demand for regional supplies.

A rise in China’s domestic base oils production would curb its demand.

Demand in southeast Asia by contrast was likely to hold firm.

South Korea’s base oils exports of almost 89,000t to the region in February edged up from the previous month to the highest since last October.

Exports of close to 180,000t to the region in the first two months of the year were up from less than 120,000t during the same period last year.

Exports to China also rose strongly in the first two months of this year following the scrapping of its zero-Covid policy at the end of last year.

Exports to southeast Asia rose strongly even without any such additional stimulus.

The shipment of large volumes to different outlets in the region helped to cushion against weaker demand in any one of those outlets.

The dynamic contrasted with China, where the state of demand for overseas supplies impacted the whole country rather than certain regions in it.