US crude exports continue to seesaw as flows to South Korea jump

Houston — Average US crude exports for the week-ended May 14 rebounded from a multiyear low the week prior amid a jump in flows to South Korea, according to data from the US Energy Information Administration and Kpler, a data intelligence company.

US crude exports averaged 3.306 million b/d over the week ended on May 14, up 1.51 million b/d from the more than two-year-low the week prior, EIA data showed. The four-week moving average was at 2.941 million b/d, up just 189,000 b/d from the four-week period ended on May 7, according to EIA data.

The jump came as flows to South Korea averaged 933,655 b/d over the week ended on May 14, the highest weekly average Jan. 24, 2020, when average flows to South Korea averaged 1.391 million b/d, according to data from Kpler. Not only was the weekly average higher, but the four-week moving average for US crude exports to South Korea was reported at 471,000 b/d, the highest moving average since the period ended on Jan. 8, 2021, when it was 516,000 b/d, Kpler data showed.

South Korean imports have up ticked recently as domestic fuel demand in the country recovers. South Korea's imports in April rose 13.9% month-on-month to around 81.91 million barrels, according to preliminary data from the Korea Customs Service. While down from the same time last year, April crude imports were the highest since December 2020, when monthly imports were recorded at 84.45 million barrels.

A fall in domestic transportation fuel demand in South Korea during the coronavirus pandemic caused refiners in the country to scale back their purchases of US crude – namely light sweet grades like WTI and Eagle Ford. In 2020, US exports to South Korea averaged just 262,000 b/d, down from the 2019 average of 420,000 b/d, data from the US Customs Bureau showed. Through the first quarter of 2021, US crude exports to the nation have averaged 321,000 b/d, US Customs data shows, while recently export levels have been even higher.

A total of 15 VLCCs have been exported to South Korea thus far in 2021, with one more set to load in late May, according to data from Kpler. By comparison, over the last six months of 2020, 10 VLCCs were exported to South Korea.

The cost of lifting US-origin crude barrels on Very Large Crude Carriers, or VLCCs, to destinations in Asia have remained relatively flat since the start of May, since dropping 7.53% from a Q2 2021 peak reached April 30 at $4.65 million.

Freight for the benchmark 270,000 mt USGC-China run was assessed at lump sum $4.3 million May 19, unchanged for the eight consecutive trading day. Freight for VLCCs unloading at Ningbo, China are held at parity with freight of ships discharging at all major South Korean ports.

Participants in the Americas dirty tanker market were looking towards improving demand in Asia to bolster freight for larger tonnage ships that typically make the long-haul voyage, however freight has since hovered above a floor of $4.1 million-$4.2 million amid the resurgence of coronavirus cases in key Asian import regions, namely India.