S Korea’s Sept base oils exports rise

South Korea’s base oils exports rebounded in September to a ten-month high, adding to a wave of additional arbitrage supplies from the Asia-Pacific region.

Base oils exports of 414,310t in September rose by 26pc from 327,730t the previous month to the highest since November 2021, government data showed.

The surge in supplies in September added to a period of unusually volatile export volumes since May. Shipments have since then surged one month then slumped the next month.

The August volume had been the second lowest in 15 months.

The sharp monthly change in base oils export volumes coincided with unusually low base oil margins in the Asia-Pacific region. The weak margins triggered moves to cut run rates in response.

Margins were under pressure because of unusually weak Chinese demand that exacerbated the persistent surplus supply in the region.

South Korean refiners were also incentivized to increase their refinery run rates to tap unusually strong diesel prices relative to crude.

A repercussion of the trend was firm base oils output even as the product’s share of total refined products output fell.

The rise in South Korea’s base oils exports coincided with and exacerbated falling regional base oils prices throughout the third quarter of the year.

The rise in supplies also coincided with a surge in base oils exports from Taiwan in September to markets like India and Mideast Gulf.

India especially is typically a key outlet for supplies from South Korea.

There was also a pick-up in availability of surplus base oils supplies from Europe and the US from the end of the third quarter.

The additional volumes added to competition for outlets like India and Latin America.

Even with the rise in supplies in September, South Korea’s total base oils exports of 3.25mn t in the first nine months of the year were still down 6pc from 3.46mn t during the same period last year.