South Korean refiner S-Oil’s profit from its base oils and lube unit surged to a record high in the third quarter of the year amid firm Group III base oils prices and lower feedstock costs.The base oil unit’s operating profit of 376.7 billion South Korean won ($264.9mn) in the three months to end-September rose from W258.9bn the previous quarter and by 30pc from year-earlier levels.Profit surged even as the base oil unit’s operating run rate fell to a two-year low of 93.4pc. The lower run rate cut supply to the equivalent of around 525,520t, down from 545,780t during the second quarter of the year.Firm prices and strong demand for the supplies countered the impact of the lower volume and supported a rise in sales to a record-high W945.4bn..Firm demand for Group III base oils limited their downward price pressure compared with other grades during the third quarter, while costs fell.European Group III base oils prices edged down by less than 7pc in the third quarter of the year from the previous three months. The price drop lagged the 14pc fall in crude oil prices during the same period.Group III prices in Asia-Pacific and US edged up in the third quarter from the previous three months.The firm prices helped to sustain base oil values versus crude and diesel at unusually steep premiums relative to more typical levels.The premium of Asia-Pacific Group II base oils to crude and diesel also improved in the third quarter of the year. But it remained relatively weak, especially compared with Group III prices.Group III base oils accounts for some 40pc of S-Oil’s production capacity.Firm prices and lower feedstock costs lifted S-Oil’s base oils operating profit margin to 39.8pc in the third quarter. The margin was up from 29.2pc during the previous three months and the third highest in more than 13 years.The firm margin contrasted with a slump in S-Oil’s refined products profit margin to less than 1pc, from more than 15pc in the second quarter of the year.The sustained strength of the base oil unit’s profit margin highlighted its value compared with the more volatile profitability of its refining unit..S-Oil’s Q2 lube profit holds firm
South Korean refiner S-Oil’s profit from its base oils and lube unit surged to a record high in the third quarter of the year amid firm Group III base oils prices and lower feedstock costs.The base oil unit’s operating profit of 376.7 billion South Korean won ($264.9mn) in the three months to end-September rose from W258.9bn the previous quarter and by 30pc from year-earlier levels.Profit surged even as the base oil unit’s operating run rate fell to a two-year low of 93.4pc. The lower run rate cut supply to the equivalent of around 525,520t, down from 545,780t during the second quarter of the year.Firm prices and strong demand for the supplies countered the impact of the lower volume and supported a rise in sales to a record-high W945.4bn..Firm demand for Group III base oils limited their downward price pressure compared with other grades during the third quarter, while costs fell.European Group III base oils prices edged down by less than 7pc in the third quarter of the year from the previous three months. The price drop lagged the 14pc fall in crude oil prices during the same period.Group III prices in Asia-Pacific and US edged up in the third quarter from the previous three months.The firm prices helped to sustain base oil values versus crude and diesel at unusually steep premiums relative to more typical levels.The premium of Asia-Pacific Group II base oils to crude and diesel also improved in the third quarter of the year. But it remained relatively weak, especially compared with Group III prices.Group III base oils accounts for some 40pc of S-Oil’s production capacity.Firm prices and lower feedstock costs lifted S-Oil’s base oils operating profit margin to 39.8pc in the third quarter. The margin was up from 29.2pc during the previous three months and the third highest in more than 13 years.The firm margin contrasted with a slump in S-Oil’s refined products profit margin to less than 1pc, from more than 15pc in the second quarter of the year.The sustained strength of the base oil unit’s profit margin highlighted its value compared with the more volatile profitability of its refining unit..S-Oil’s Q2 lube profit holds firm
