S Korea’s Feb exports to Europe rise

South Korea’s base oils exports to Europe rebounded to a five-month high in February as a larger flow of arbitrage shipments supplemented a pick-up in supplies of Group III base oils to the region.

The arbitrage shipments tapped a wide gap between Asia-Pacific and European Group II base oils prices during the first few weeks of the year.

The pick-up in Group III shipments to Europe tapped tighter regional supply-demand fundamentals and firm prices for the product at the start of the year.

Falling European Group II prices in recent weeks complicated the prospect of additional arbitrage shipments moving to the region.

Signs of a pick-up in Group III shipments from Mideast Gulf to Europe in recent weeks were likely to ease the region’s supply tightness of the premium-grade product.

The trend would curb the need for larger-than-usual volumes from Asia.

South Korea’s total base oils exports of more than 34,600t to Europe in February rose from less than 600t the previous month, government data showed.

The volume was the highest since September.

Exports to markets like France and Turkey rose to a five-month high of almost 8,000t in February. At least some of the shipments likely included arbitrage supplies.

The arbitrage opportunities extended beyond Europe to nearby markets like Africa.

A 4,000t cargo moved from South Korea to Nigeria in February. It followed the shipment of a slightly larger cargo to Egypt the previous month.

The supplies to Nigeria were the first volumes from South Korea to the West African country in four years and the first-ever cargo shipment.

South Korea’s exports of almost 26,800t in February to Belgium and Netherlands combined were the highest in sixteen months.

The shipments followed a halt in flows to the two countries in January. The pause in shipments exacerbated Europe’s Group III supply tightness at the start of the year.

The tight supplies and firm prices contrasted with healthy availability and lower Group III prices in the US market.

The disparity incentivized refiners to move more shipments to Europe.