South Korea’s base oils output rose in August to the highest in more than three years following the completion of a protracted round of plant maintenance work in the first half of the year.Firm base oils margins then added to refiners’ incentive to maximise output, especially for heavy-grade supplies.South Korea’s base oils output came to 2.87 million barrels (404,000 tonnes) in August, industry data showed..The volume rose from 2.75 million barrels in July and from average levels of less than 2.50 million barrels/month in the year to June.Output stayed lower during that period because of scheduled plant-maintenance work and unexpected production issues or run-cuts.Lower output cut South Korea’s base oils exports during that period and compounded the regional impact of recent base oils plant-closures in Asia.The tighter regional supply supported firmer base oils margins and kept shut the arbitrage to move shipments to outlets like the Americas..The recent rise in South Korea’s base oils output raised the prospect of reversing those trends, even if not immediately.South Korea’s higher base oils output in August failed to trigger a similar rebound in the country’s base oils exports, curbing the impact on overseas markets.The disconnect between output and exports instead left South Korea’s supply exceeding demand in August for the third time in four months.The initial rise in South Korea’s surplus supply likely helped to replenish depleted domestic stocks after the protracted round of plant-maintenance.The ongoing rise in surplus supplies could leave those stocks at increasingly healthy levels despite the lack of any scheduled upcoming plant-maintenance work.Any moves to trim those stocks, combined with base oils output holding at higher levels, could trigger a subsequent rise in South Korea’s base oils exports.Any such rise in exports would coincide with the recent start-up of a new Group II base oils unit in Singapore.The dynamic raised the prospect of a simultaneous rise in shipments from Asia’s two largest base oils exporters over the coming months..S Korea’s August base oils exports fall.South Korea’s July base oils output rises.ExxonMobil ships Group II base stocks from new Singapore units.Base Oil News stories and analysis also available on ICIS platform
