S Korea’s January exports to NE Asia fall

South Korea’s base oils exports to northeast Asia fell in January to the lowest in more than five years amid a dip in shipments to China.

Exports to China fell as a slowdown in economic activity ahead of and during the lunar new year holidays cut demand.

Chinese buyers also preferred to hold off replenishing stocks amid uncertainty about the impact of the spread of the Covid-19 virus in the country.

The subsequent fall in demand contrasted with a rise in South Korea’s total base oils exports in January.

Taiwan faced a similar scenario of rising exports and falling Chinese demand.

The trend triggered a wave of shipments to other markets instead.

Chinese demand revived from February, leaving buyers with a much shorter timeframe to replenish stocks.

South Korea’s base oils exports of 60,520t to northeast Asia in January fell from almost 82,000t the previous month, government data showed.

The volume was the lowest since second-half 2017.

Exports of less than 36,000t to China in January fell from close to 60,000t in December.

The volume was close to the lowest in more than a decade. It was similar to some of the monthly volumes in 2022, when a slump in lube demand was one of the consequences of China’s zero-Covid policy.

The size of the drop in Chinese base oils demand in January highlighted the difficulty for regional producers to line up shipments to the country and the risk of facing a rise in surplus supplies.

South Korea’s base oils exports to Japan extended their fall in January for a fourth month in five, compounding the drop in shipments to the region.

Exports of less than 119,000t to the country in the five months to January fell by 27pc from more than 162,000t during the same period a year earlier.

The fall in shipments coincided with a sustained slowdown in Japan’s consumption of heavy-duty engine oils and industrial oils during the second half of 2022.

The country's slowdown in demand is likely to extend into this year.