Exports show signs of extending slowdown in November
Slowdown contrasts with pick-up in flows from Middle East to US
Drop in exports precedes seasonal slowdown in US demand at year-end
South Korea’s base oils exports to the US fell to a nine-month low in October, with the slowdown showing signs of extending into November.
Total exports of close to 37,000 tonnes in October fell from almost 52,000 tonnes in September, government data showed.
The volume was the lowest since January and extended an 11% fall in total shipments to the US in the first ten months of the year.
The drop in exports contrasted with a rise in South Korea’s overall exports in October, including a surge in flows to the Middle East.
Lower shipments to the US in October raised the prospect of curbing a build-up of surplus Group III base oils supplies in the country at a time when demand typically softens towards year-end.
The slowdown also coincided with a pick-up in shipments from the Middle East to the US, with several large cargoes expected to arrive early next month.
An extension of that trend could cut South Korean refiners’ share of the US Group III base oils market and simultaneously boost the share covered by sources like Bahrain and the UAE.
A pick-up in South Korea’s exports could alternatively help to maintain or increase its share of the US Group III market. But it would risk leaving the US with an oversupply of premium-grade base oils.
Such a scenario could put further pressure on US Group III prices that are already at a steep discount to prices in Europe.
