S Korea Sept exports to Americas rise

South Korea’s base oils exports to the Americas rose in September to the second-highest level ever amid a rebound in shipments to the US and a sustained wave of arbitrage flows to Latin America.

Total exports of 99,760t to the Americas more than doubled from the previous month and rose by more than a quarter from year-earlier levels, government data showed.

The year-on-year increase was the fourth in five months. The only month when exports to the Americas was higher was in July.

The surge in shipments in the third quarter lifted total exports to the Americas to more than 251,500t in the three months to end-September.

The volume was up 23pc from the previous three months and the highest quarterly volume on record.

US base oils prices at a steep premium to other markets kept the arbitrage wide open for supplies from Asia-Pacific especially.

Chinese base oils prices at a steep discount to Asia-Pacific prices left regional refiners with a persistent supply overhang. The surplus in turn kept pressure on Asia-Pacific prices.

The open arbitrage to the Americas market provided a valuable outlet for the surplus shipments.

More than 13,000t of shipments from South Korea were lined up to move to Latin American markets like Ecuador and Peru in September.

The volume was the second highest ever. The highest volume had been in August.

The rise in arbitrage flows added to a rebound in South Korean shipments to the US.

Exports of 86,600t to the US in September recovered from less than 34,000t in August to the second highest in almost three years.

The highest during that period had been in July.

The shipments likely consisted mostly of Group III base oils.

US Group III base oils prices moved to a widening premium to European prices during the third quarter of the year.

The trend reflected firm US Group III consumption combined with weakening demand and improving supply availability in Europe.

The widening premium of US prices to other markets boosted the incentive for overseas producers like South Korea to move more Group III shipments to that market.