SK Innovation’s base oil and lubricants segment reported 28.9 billion South Korean won (U.S. $23.5 million) in operating profit for the first quarter of this year, a nearly 39 percent drop from 47.1 billion won in the same period in 2019. The company attributed the decline to lower sales volume and inventory-related losses.

In its earnings presentation, the company anticipated second-quarter demand will remain weak because of the impacts of the covid-19 pandemic. It anticipates that lower crude oil prices will put downward pressure on base oil prices.

Sales for the base oil and lubricants segment slid to 641.8 billion won, down more than 15 percent from 756.5 billion won in 2019’s first quarter.

S-Oil

S-Oil’s base oil sector reported 116.2 billion won in operating income for the first quarter, up more than 310 percent from 28.3 billion won in 2019’s first quarter. Revenue reached almost 434 billion won, up about 19 percent from 365 billion won.

The company noted in its earnings presentation that, amid a plunge in crude oil prices, overall base oil price spreads rose as the drop in raw material costs was larger than the drop in product prices.

In its second quarter outlook, expects-Oil is in line with SK’s expectation that lowered feedstock prices amid weak demand will put downward pressure on base oil prices.

Hyundai Shell Base Oil

Joint venture Hyundai Shell Base Oil reported operating profit of 23.5 billion won in the first quarter, up more than 3,800 percent from 600 million won in 2019’s first quarter. Sales declined to just over 180 billion won in the quarter, down 14 percent from 209.3 billion won.

The 60-40 joint venture between Hyundai Oilbank and Shell produces only API Group II base oil.

Hyundai Oilbank said in its earnings presentation that the j.v.’s base oil production margin improved as raw material prices dropped, in line with falling crude oil prices.