S.Korea's refining industry sees record export of 245.3 mn barrels

South Korea's four major oil refiners—SK Energy, GS Caltex, S-Oil Corp., and HD Hyundai Oilbank—achieved a record high in petroleum product exports in the first half of this year, driven by rising global demand and diversification of export markets, the Korea Petroleum Association announced on Wednesday.

The combined export volume reached 245.3 million barrels, marking a 7.3% increase year over year and surpassing the previous record of 237 million barrels set in the first half of 2018.

This surge was fueled by increased global demand for gasoline and jet fuel, as average refinery operating rates rose to 80.0% from 72.6% the previous year.

Australia emerged as the top export destination (18.6%), followed by Singapore (13.0%), Japan (11.5%), China (9.0%), and the US (8.7%).

Notably, China's ranking slipped from its six-year dominance due to rising domestic production.

Exports to Japan experienced a significant increase, with gasoline and jet fuel deliveries surging 51% and 70% respectively, driven by a weak yen and increased overseas travel.

However, the refining industry faces challenges as refining margins, critical for profitability, have deteriorated. Increases in petroleum product exports from China and India have led to oversupply.

According to the International Energy Agency (IEA), Singapore's complex refining margin plummeted from $10.0 per barrel in the first quarter to $4.8 per barrel in the second quarter.

The industry typically considers the break-even point to be between $4 and $5 per barrel.

Write to Hyung-kyu Kim at khk@hankyung.com