South Korea’s base oils production surged in January, yet exports took a sharp dive for the second consecutive month—creating an intriguing market shift that could impact global supply dynamics.
According to industry data, base oil production increased to 2.61 million barrels (368,000 tonnes) , slightly up from 2.56 million barrels in December . However, production still lagged behind the normal level of around 2.70 million barrels , reflecting ongoing adjustments due to maintenance, operational constraints, and strategic output cuts.
While production saw a slight rebound, exports declined significantly , mirroring a similar trend observed in September , when a sharp drop in exports caused net supply to spike to a two-year high . This time, however, the surplus supply in January reached its highest level in over three years , indicating a more pronounced market shift.
Base Oil Group 3 Products BWP : Base oil 6cst , Base oil 4cst
Why Does This Matter?
- Stockpiling Before Shutdown – The surplus base oils helped build inventories ahead of the planned maintenance shutdown of a key Group II base oils plant in late February , ensuring supply security.
- Potential Market Adjustments – With production expected to remain lower in the coming months , the market could see a repeat of past trends , where a temporary slump in exports leads to a later rebound.
- Pricing & Global Supply Impact – The shift in South Korea’s base oil supply could influence regional pricing, trade flows, and availability for key buyers, especially in Asia and Europe .
In October , exports recovered swiftly following a September drop, despite lower production caused by plant shutdowns. If past trends hold, South Korea’s base oils market could be preparing for another export surge in the coming months —a factor that traders and industry players will closely watch.
Key Takeaway
With production cuts, export fluctuations, and a major plant shutdown looming , South Korea’s base oils market is in a state of transition, setting the stage for potential pricing shifts and supply adjustments across the global lubricant industry.
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