South Korea’s base oils output fell in January as the country’s refiners focused on producing middle distillates.Weak base oils prices and healthy regional availability of supply incentivized such a move.The same trend showed signs of extending into the months of February and March.Chinese demand for overseas base oils supplies improved in February from the previous month. But the strength of the rebound remained relatively muted compared with other countries after they ended their Covid-19-related restrictions.The more muted rise in demand left South Korean producers facing the risk of needing to redirect supplies to other markets instead.An alternative was to slow any planned pick-up in production and to produce more diesel instead.South Korea’s base oils output of more than 2.75mn bl (388,170t) in January fell from almost 2.80mn bl the previous month and by 4pc from year-earlier levels, according to Korea Petroleum Association (KPA)..Monthly output mostly held in a narrow 2.60-2.79mn bl range since the middle of last year. It last exceeded the 2.80mn bl level in May 2022.The drop in output for an eighth straight month from year-earlier levels contrasted with a rise in diesel production in January for the fifteenth time in sixteen months.The rebound in jet-fuel production was even longer and steeper.The premium of middle distillate prices to crude fell in recent months. But it remained much higher than usual and provided an ongoing incentive for refiners to maximise output of the product.The larger number of outlets for middle distillates compared with base oils added to their attraction.That flexibility had additional value at a time of uncertainty about the strength of a pick-up in China’s base oils demand..Asia’s January exports to China fall
