S Korea’s July base oil exports rebound

South Korea’s base oils exports rebounded in July to their highest this year, adding to an already well-supplied market.

Base oils exports of 391,910t in July rebounded from a 25-month low of 300,520t the previous month, government data showed. The volume was the highest since December.

Even with the pick-up in supplies, total exports of 2.51mn t in the first seven months of the year still lagged year-earlier levels of 2.68mn t.

The fall in base oils exports in June had coincided with weak base oil prices relative to crude and diesel.

The trend, combined with unusually strong diesel prices relative to crude, had incentivized some refiners to focus on producing more middle distillates.

The incentive began to wane in July as diesel prices weakened relative to crude and as base oils values improved relative to crude and diesel.

Base oils availability in the region had been sufficient in June even with the fall in South Korea’s base oils exports.

The balanced supply mostly reflected the still-muted demand from China. The trend freed up more supplies to move to other markets.

Chinese demand remained muted in July even as South Korea’s base oils exports rebounded.

The trend left even more South Korean supplies available both for regional and for more distant markets.

The rise in supplies coincided with more cautious buying in Asia-Pacific amid expectations that prices would fall further.

The caution has now spread to more distant markets, where prices have been much higher than in Asia-Pacific.

Those markets had previously been regular outlets for surplus volumes from South Korea in the first half of the year.