Profits Surge for Hyundai Shell Base Oil, Thai Oil


Profits Surge for Hyundai Shell Base Oil, Thai Oil

Base oil price margins that were far greater than a year earlier yielded hefty increases in first quarter operating profits for Hyundai Shell Base Oil and Thai Oil’s base oil business, the companies indicated in earnings statements.

Meanwhile, Pakistan’s Hi-Tech Lubricants posted higher profits and sales for the quarter ending March 31, third of its fiscal year, although it expressed concerns about supply chain and economic issues.

According to Hyundai Oilbank, the base oil price margin for API Group II 500 neutral was $216 per metric ton in the first quarter, 171% higher than the first quarter of 2022. The margin for Group II 150N was 200% higher at $171/t.

Thai Oil said in its earnings presentation that the average price for Group I solvent neutral 500 solvent neutral was down year on year in the first quarter, while its spread over fuel oil prices rose substantially. According to the company, the average price for SN500 was down 3% at $1,047 per metric ton in the quarter, while the spread over high-sulfur fuel oil jumped 22% to $640/t during the period.

Hyundai Shell Base Oil

The joint venture between Hyundai and Shell reported that operating profit for its base oil business jumped 47% to ₩30.8 billion in the first quarter, compared to ₩16.4 billion.

Sales for the base oil business improved 45% to ₩379.7 billion in the first quarter, compared to ₩261.4 billion.

The 60-40 joint venture between Hyundai Oilbank and Shell produces API Group II base oil at its plant in Daesan, South Korea.

The company noted that base oil margins remained flat due to continued sluggish base oil demand, while supply decreased due to regular maintenance in the region.

Thai Oil

Thai Oil reported net profit for its lube base oil business of surged 169% to 886 million Thai baht (U.S. $ million) for the first quarter, compared to 329 million baht in the same period last year. Net profit benefited from a lower fuel oil price, which is what base oil business’ feedstock price was linked to.

Lube base oil sales revenue decreased 8% to 6.3 million baht. The company attributed the decrease to lower product selling prices and lower production and sales volume.

The company’s plant in Si Richa, Thailand reported a base oil production rate of 79%, down from 89%. Base oil production volume for the quarter declined 12% to 52,00 metric tons in the first quarter.

Thai Oil’s base oil plant has 267,000 metric tons per year (5,100 b/d) of API Group I production capacity. The base oils are primarily used in industrial and marine lubricants and in engine oils for older engines.

Hi-Tech Lubricants

Hi-Tech Lubricants, based in Lahore, reported consolidated net profit of 189.6 million Pakistani rupees (U.S. $660,000) for the quarter ending March 31 – the third quarter of its fiscal year that ends on June 30. That was 9% higher than Rs 209.1 million in the same period last year.

Profit from operations also increased, by 28%, to Rs 426.6 million.

Net sales for the quarter rose 8% to Rs 4.1 billion.

“Supply chains in Pakistan across industries remained a test for the business environment,” Hi-Tech Lubricants said in its earnings report, explaining that supply chains were seriously impacted by import regulations and U.S. dollar outflow management, mainly due to what it termed dismal foreign exchange reserves in the aftermath of a standoff between the government and the International Monetary Fund.

“The results were driven by availability of stock through prudent ordering, and a relentless focus on the retailer channel,” the company continued, adding that Pakistan’s economic environment remains very volatile.

For the nine months ended March 31, Hi-Tech’s lubricants segment slipped to an Rs 138.1 million net loss, compared to an Rs 722 million net profit in the same period last year. Lubricants segment profit from operations for the 9-month period fell 69% to Rs 268.3 million.

Hi-Tech’s lubricants segment’ sales revenue for the nine-month period declined 10% to Rs 5.8 billion.

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