South Korea’s base oils exports rose to a four-month high in June amid a recovery in Group II output following recent plant-maintenance work.Base oils exports rose at a time of year when Asia’s lube demand typically faces a seasonal slowdown.Asia’s base oils prices held firm in recent weeks relative to prices in markets like the Americas, even with the prospect of slowing regional demand and rising supply from sources like South Korea.The relative price-strength suggested that Asia’s fundamentals remained sufficiently balanced for now even with those diverging supply-demand dynamics.South Korea’s total base oils exports of 355,200 tonnes in June rose from around 325,000 tonnes in each of the previous three months, government data showed..The June volume exceeded typical export levels of around 347,000 tonne/month in 2024.Export volumes were lower than usual in the three months to May because of plant-maintenance work.The drop in shipments added to Asia’s tight supply-demand balance in the first half of the year.South Korea’s exports could extend their recovery in the third quarter of the year following the completion in late-June of maintenance work on another base oils unit.The prospect of rising shipments has so far had little impact on Asia’s base oils prices, especially relative to prices in more distant markets like the Americas.The closed arbitrage to those markets raised the prospect of a build-up of supplies in Asia.The closed arbitrage could instead reflect firmer-than-expected demand in Asia.An unusual pick-up in South Korea’s base oils exports to China in June pointed to such a dynamic.Exports of close to 49,000 tonnes to China in June rose from less than 36,000 tonnes the previous month to the highest since February.South Korea's exports to China usually fall in the month of June from the previous month.The rise in shipments coincided with a drop in China’s output of premium-grade base oils in June because of maintenance-work and run-cuts.Most of the plant-maintenance work has now been completed.The run-cuts coincided with low domestic Group II and Group III base oils margins.An extension of that domestic price-weakness into the third quarter of the year could limit the size of any recovery in output in the coming weeks.Such a scenario could extend a pick-up in buying interest in supplies from overseas sources like South Korea..Taiwan’s June base oils exports hold firm.China’s June base oils output falls.Asia’s May lube demand falls
