South Korea’s base oils output fell in December to the second-lowest level in eight months after a refiner faced unexpected production issues in the second half of the month.The country’s total base oils output of 2.56 million barrels (361,000 tonnes) fell from 2.64 million barrels the previous month, industry data showed.The volume remained up from 2.43 million barrels in October, when one of South Korea’s key Group II base oils units was offline for maintenance work.Excluding that month, it was the lowest since last April, when another base oils unit was undergoing maintenance work.Lower output in December preceded a drop in some refinery run-rates in January because of weak base oils margins.The premium of CFR India N70 cargo prices over Singapore gasoil fell in January to its lowest in more than a year.The lower premium complicated the arbitrage to move light-grade supplies to markets like India and incentivized refiners to produce more diesel instead.Lower refinery run-rates in January preceded planned maintenance work on a key Group II base oils plant in South Korea from end-February.Lower base oils output late last year and early this year likely complicated and prolonged moves to build stocks to cover requirements during the plant shutdown that runs until mid-April.The lower output likely already steepened a sharp drop in South Korea’s base oils exports in December.The prospect of lower supply and exports early this year would cushion the impact of seasonally weak demand at the start of the year.It would then magnify the impact of a seasonal rise in demand later in the first quarter of the year.Asia’s Group II heavy-grade cargo prices held firm early this year even before a likely tightening of supply-demand fundamentals in the coming months.The premium of Group II N500 over Singapore gasoil prices slipped in January following a rebound in crude oil prices.The premium was still the second-highest for the month of January in the past decade.The highest in that time was in January 2021, when margins got a boost from covid-related restrictions..S Korea December base oils exports fall.Thailand Dec base oils supply holds firm.China’s Jan base oils output holds firm.Base Oil News stories and analyses also available on the ICIS platform
