First quarter operating profits for SK Enmove and GS Caltex’s base oils and lubricants division jumped 22% and 77% compared to the same period of last year, while operating income was flat for S-Oil’s base oils and lubricants business.
Factors cited as helping increase base oil demand in the quarter included China’s reopening – following three years of closed borders as part of its zero-Covid policy – and some recovery in transportation demand, along with inventory stockpiling.
SK Enmove
SK Innovation’s SK Enmove base oils and lubricants business reported ₩259.2 billion in operating profit for the first quarter, a 22% increase. Sequentially, operating profit declined 3% from last year’s fourth quarter, “as sales price adjustment and [foreign exchange] rate decline squeezed price margins,” the company said, noting that occurred despite increased sales and lower oil prices that helped curb costs.
Sales for the first quarter were up 25% at ₩1.3 trillion won.
S-Oil
S-Oil’s base oil and lubricants business reported ₩195.8 billion won in operating income, slightly up from ₩195.3 billion won.
Sales revenue for the segment increased 3% to ₩762.5 billion won.
The company said the product spread between composite base oil – an aggregated number including Group I base oils – and vacuum gas oil slightly adjusted downward sequentially to $67 per barrel in the first quarter, compared to $73.50/bbl in 2022’s fourth quarter, but remained higher than usual under lowered feedstock cost. Year-on-year, the $67/bbl spread was well above the $44.50 mark in the same quarter last year.
S-Oil said that base oil fundamentals regained firmness during the first quarter, with rebounding demand past the winter off-season. The company noted factors such as base oil demand recovery after China’s reopening and the Chinese New Year, along with inventory stockpiling ahead of the peak season.
GS Caltex
GS Caltex’s base oils and lubricants division reported operating profit of ₩125.6 billion for the first quarter, a 77% jump from ₩71.1 billion.
Sales revenue for the quarter rose 27% to ₩577.5 billion.
The company noted the base oil price spread was relatively good in the first quarter, compared to refining spreads, because demand for base oil increased due to China’s reopening and recovery in transportation demand.