Korean refiners cut export price as storage supplies max out

South Korean refiners are exporting more petrochemical products at lower prices as their storage facilities have reached their limit due to a sharp fall in domestic demand, industry sources said Thursday.

According to the state-run Korea Natural Oil Corp.’s oil information provider Petronet, the domestic consumption of petroleum goods in February sank to 72.12 million barrels -- the lowest figure since 70.82 million barrels of April 2016 -- while outbound shipments in February rose 8.28 percent on-year to 42.94 million barrels though unit price dropped about 8 percent to $65.87 per barrel in the same period.

“Though Korean refiners face negative refining margins, they are forced to export products as storage facilities are fully packed with consumption plummeting domestically,” a Korea Petroleum Association official said.

Domestic consumption for aviation fuel and gasoline fell 4.43 and 5.94 percent in February on-year, respectively. Meanwhile, exports of the two items increased 15.56 and 21.06 percent in the same period.

Though petroleum products exports surged in February despite low global demand amid the coronavirus outbreak, it remains to be seen whether the trend will continue in March.

“In February, the effects of the COVID-19 outbreak were largely confined to China and Korea, which might explain the rise in exports,” an industry source said. 

By Kim Byung-wook (kbw@heraldcorp.com)