S Korea’s Feb base oils exports rise

South Korea’s base oils exports surged to a three-year high in February amid a rebound in shipments to China.

The rise in supplies to China added to signs of a pick-up in the country’s base oils demand after the lunar new year holidays.

The strength of the rise in demand remained unclear.

A regionwide seasonal rise in demand during the first few months of each year typically supports a rebound in base oils prices.

China’s domestic prices rose in early February before holding in a narrow range since then.

The relatively muted price-rise suggested that there was sufficient availability for buyers to cover their requirements with ease.

The surge in South Korea’s total base oils exports also left producers with sufficient supplies to cover requirements in other markets.

The northeast Asian country’s base oils exports of more than 447,000t in February rose from close to 361,000t the previous month and from little more than 300,000t in December, government data showed.

The December volume fell to a two-year low at the same time as China’s Covid-19 lockdowns drew to a close.

The February volume was the highest since January 2020, when China’s Covid-19 lockdowns began.

Asia-Pacific base oils prices weakened relative to crude and diesel in January, when China’s demand remained weak.

Regional prices firmed relative to crude and diesel from early February even as South Korea’s exports surged.

The firm prices suggested demand remained sufficient to absorb the rise in supplies.

Base oils exports of almost 112,000t to China in February rose more than threefold from less than 36,000t the previous month.

The volume was the highest since June 2020, when Chinese demand was rebounding following the relaxation of its first round of lockdowns.

Exports of 147,870t to China in the first two months of the year were up 18pc from less than 126,000t during the same period last year.

The volumes remained lower than shipments of more than 200,000t to China in the first two months of 2019, the year before the Covid-19 pandemic began.

The sustainability of the rise in shipments was uncertain amid an expected rise in China’s domestic base oils production over the coming months once plant maintenance work has been completed.

China's unusually low domestic base oils production in February had increased buyers’ need to tap overseas supplies to cover their requirements.