S Korea July exports to Europe stay low

South Korea’s base oils exports to Europe stayed low in July amid signs of a sustained slowdown in Group III shipments to the region.

Total exports of 15,790t to Europe in July edged up from 15,740t the previous month, government data showed.

Exports were steady even as South Korea’s total base oils shipments surged in July to the highest this year.

The steady flows masked a sustained slowdown in base oils shipments to Europe this year.

Exports of 121,750t to Europe in the first seven months of the year were down 38pc from 195,820t during the same period last year.

The slump in supplies during that period mostly reflected a 40pc fall in combined shipments to the Netherlands and Belgium to less than 88,000t.

Shipments to those outlets typically consist mostly of Group III base oils.

A surge in South Korea’s base oils exports to the two countries in first-half 2021 helped to cover for a heavy round of overlapping Group III plant maintenance work in Europe at that time.

The lack of any such maintenance work so far this year left regional Group III supply more plentiful and curbed the need for supplementary shipments from South Korea.

Exports of other premium-grade base oils to other European outlets like France also fell.

Total shipments of 34,110t to the region in the first seven months of the year were the lowest for that period in four years.

Exports fell despite a wide-open arbitrage to move Group II base oils from Asia-Pacific to Europe.

European demand for supplementary supplies was also unusually strong because of tight availability and high prices for Group I base oils.

The limited export volumes suggested that other factors like logistical challenges and high freight rates deterred more arbitrage flows to Europe.

There was instead a marked pick-up in shipments from South Korea to Latin America during the first seven months of the year.