15-09-2016

S Korean gasoline exports fall sharply in August on export availability, prices

lpg

South Korea is close to being overtaken by China as North Asia’s biggest gasoline exporter after its gasoline shipments in August tumbled by 36% year on year, pulled lower by stronger domestic demand and yield switching by refiners.

Total exports fell to 539,249 mt from 848,801 mt a year ago, and were also down from July’s 928,994 mt, data from the country’s Customs Service showed Wednesday. South Korea’s monthly average export of 796,651 mt of gasoline between January-August is only marginally higher than China’s 773,915 mt between January-July, according to the latest available customs data.

China is expected to export 800,000 mt to 1 million mt of gasoline per month for the rest of the year, trade sources have estimated, which would easily surpass South Korea for the whole year and make it the biggest gasoline exporter in Northeast Asia.

South Korea’s exports to all major destinations fell in August while it made no direct shipments of gasoline to Indonesia for the first time in at least five years.

Average monthly flows from South Korea to Indonesia between January-July were 75,927 mt.

Shipments to Australia halved from July’s year-to-date high of 240,474 mt, while Singapore received 51,457 mt of Korean gasoline compared with the year-to-date monthly average of 162,607 mt.

LOWER VIETNAM IMPORT FROM NOW ON

Vietnam’s receipts of Korean barrels also eased. The country, which sourced almost all its gasoline import from South Korea in the past several months, imported only 101,348 mt from its favorite supplier in August, the Korean customs data showed. Vietnam’s imports of Korean cargoes are expected to remain suppressed as the country has cut its domestic gasoline tax from 20% to 10% for the remainder of the year, and to zero from January 1 next year, making gasoline output from domestic refinery Dung Quat more attractive to offtakers than previously.

All import cargoes to Vietnam are taxed at 20% except for those of Korean origin, which are taxed at 10%.

LOWER REFINERY OUTPUT

Sources cited several reasons for Korea’s gasoline export plunge, with one producer in the country attributing it to “yield switching and summer demand.”

Korean refiners have been maximizing gasoil production and minimizing gasoline production to take advantage of better gasoil cracks.

Assuming 90% operating rates in August at South Korea’s 3 million b/d refining capacity, a 1-2% yield switch would mean a 99,000-198,000 mt reduction in gasoline production for the month.

In addition, trade sources said that domestic gasoline demand has been good this year, with summer demand even higher. Korean domestic gasoline demand was 6.54 million barrels, or about 773,373 mt in July, according to the last monthly data available from Korea National Oil Corp. Monthly average demand of 756,061 mt between January-July this year was 3% higher than the same period last year.

In 2013-2015, August demand was 9-15% higher than July. LOADING POSTPONEMENTS ON RISING PRICES

Some sources said that possibly the biggest factor behind the export volume change was that, with gasoline cracks and flat prices rising from late July through August, producers were likely to want to hold on to their cargoes longer to wait for better prices.

FOB Singapore 92 RON gasoline rose from $46.07/b on August 1 to $54.3/b by the end of the month, Platts data shows. This movement may have seen a number of cargoes scheduled for August loading being held back, which may see September loading volumes rebounding significantly.

Source: Platts 

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