Among South Korean base oil refiners, SK Lubricants reported a slight increase in operating profit for the third quarter, noting that lower costs and higher sales prices helped support pricing margins, while GS Caltex reported a drop in operating profit.
SK
SK Innovation’s base oils and lubricants segment reported a 2% uptick in operating profit to 329.3 billion South Korean (U.S. $244 million) in the third quarter – which the company compared to ₩336 billion in the same period last year.
Operating profit increased quarter over quarter, despite declines in base oil and lubricant sales volumes, as lower costs, backed by tumbling oil prices and strong sales prices, shored up margins, the company said in its earnings presentation.
Sales for the segment rose 55% to ₩1.4 trillion in the third quarter, compared with ₩912 billion in the same period of 2021.
GS Caltex
Operating profit for GS Caltex’s lubricants and base oils business decreased 6% to ₩165 billion won, compared to ₩174.7 billion won in the third quarter of 2021. Sales jumped 16% to ₩558.4 billion.
The spread between average base oil prices and Dubai crude oil prices was relatively good in the third quarter – compared to the prior three quarters – due to strong base oil demand and tight supply. Base oil supply was constrained by refiners shifting feedstock away from base oil production to increase output of diesel, the company noted.
Compared to a year ago, the spread improved for light base oils but decreased for heavy grades. In the third quarter of this year, the spread was $47.20/barrel for API Group II 150 neutral and $55/bbl for 500N. In the same period of 2021, the lighter grade had a spread of $28.60/bbl, while the spread for 500N was $92.50/bbl.