Profits increased more than 10% for SK Lubricants in the second quarter, while profits tumbled almost 70% for fellow South Korean base oil refiner Hyundai Shell Base Oil and decreased nearly 10% for the base oil and lubricants business of S-Oil, compared to the same period last year. Sales were up for all three companies.
SK Lubricants
SK Lubricants reported that its operating profit grew 13% to ₩255.2 billion (U.S. $195.7 million) in the second quarter, improving from ₩226.5 billion.
Operating profit in the quarter benefited from rising lubricant sales prices, mirroring spiking in oil prices and inventory valuation gains.
Sales for the second quarter were up 61% at ₩1.2 trillion, up from ₩762.8 billion.
The company said it projected the base oil price spread to remain flat and stable as base oil supply tightness eases.
S-Oil
S-Oil’s base oil and lubricants business reported ₩258.9 billion in operating income for the second quarter, a 9% decline from ₩284.5 billion in the same period last year.
Revenue jumped 35% to ₩888 billion, improving from ₩659.5 billion.
S-Oil makes API Group II and Group III base oils at its plant in Onsan, South Korea, and sells finished lubricants.
The products spread in Asia between base oil compositive prices and high-sulfur fuel oil averaged $53.40 per barrel in the second quarter, the company said in its earnings presentation. Although that’s down 35% from $81.90 in the same quarter last year, the sequential 26% uptick from $42.40 in this year’s first quarter ended a downward sequential trend in the last three quarters. The base oil spread widened due to product prices catching up to an increase in feedstock price, the company said.
Hyundai Shell Oilbank
Hyundai Shell Base Oil, the joint venture between South Korea’s Hyundai Oilbank and Shell, reported that operating profit for the second quarter tumbled 68% to ₩29.4 billion, down from ₩92.1 billion.
Sales slipped 2% to ₩286.4 billion in the quarter.
The 60-40 joint venture between Hyundai Oilbank and Shell produces Group II base oil.
In its earnings presentation, Hyundai Oilbank noted that the base oil price spread rose in the quarter due to the rise in base oil prices, along with the rise in oil price and the decrease in global base oil supply due to preferential production of diesel. The company said it expected base oil demand to remain flat in the third quarter due to the impacts of the monsoon season in India and China’s coronavirus lockdown measures.