S Korea’s October base oils exports fall

South Korea’s base oils exports fell in October close to their lowest in more than two years amid signs of dwindling surplus supply in Asia-Pacific.

Base oils exports of 329,900t in October fell by 20pc from 414,600t the previous month and by 23pc from year-earlier levels, government data showed.

The volume was down from typical levels of around 378,000 t/month over the past year.

Exports fell year-on-year for the eighth time in nine months, cutting total shipments to 3.58mn t in the first 10 months of the year.

The volume was down 8pc from 3.89mn t during the same period last year and the lowest in six years.

South Korea’s base oils exports fell this year despite a relatively light round of plant maintenance work.

The slowdown instead reflected lower refinery production levels in response to weak regional base oils prices and unusually slack demand in China.

The weak base oils fundamentals contrasted with unusually strong diesel values.

South Korea’s refiners responded by focusing on maximizing middle distillates production instead.

The fall in base oils exports in October also followed a jump in shipments in September to a 10-month high.

A large portion of the September shipments included arbitrage cargoes to markets like Europe and Latin America.

Base oils exports from other Asia-Pacific producers like Taiwan also surged in September amid moves to clear a large supply surplus from the region.

Asia-Pacific base oils prices remained under pressure in the third quarter of the year as producers offered supplies at prices that enabled them to clear the surplus shipments.

The subsequent drop in surplus supply, combined with lower production levels, cut South Korea’s urgency to move more arbitrage shipments in October.

Signs of a pick-up in Chinese demand in recent months added to the firmer fundamentals.

Asia-Pacific base oils prices were steadier in recent weeks, reflecting the more balanced supply-demand fundamentals.