S Korea’s August base oils exports fall

South Korea’s base oils exports fell in August amid weaker regional demand and lower prices.

Exports of 326,900t in August fell from 391,910t the previous month and by 3pc from year-earlier levels, government data showed. The volume was the second lowest in the past 15 months.

The drop in exports for a sixth time in seven months cut total shipments to 2.84mn t in the first eight months of the year.

The volume was down 6pc from 3.02mn t during the same period last year and the lowest for that period in six years.

Base oils exports were even lower than in 2020, when refiners slashed run rates in response to a slump in demand during widespread nationwide lockdowns.

Exports were lower even as South Korea’s refinery run rates have been higher this year than during that period. The disconnect reflected their focus on producing more middle distillates instead.

Base oils exports fell in first-half 2020 because of weak demand that slashed base oils prices and margins. Refiners cut production in response.

Base oils exports have fallen this year for similar reasons.

The steeper slowdown in South Korea’s August shipments coincided with a seasonal drop in demand in southeast Asia and India.

Strong demand in those markets in the first half of the year had cushioned the impact of a slump in Chinese demand since the start of the second quarter.

Regional base oils prices dipped during the third quarter of the year as a muted pick-up in Chinese demand was insufficient to balance out the seasonal slowdown in those other markets.

South Korea’s lower base oils export volumes have been insufficient to avoid persistent surplus supply in the Asia-Pacific region.

But the surplus has been manageable and cleared regularly through shipments to more distant markets like Latin America.