South Korean refiners cut March transport fuels output 8% on year, lower crude throughput 4%

Seoul — South Korean refiners reduced production of transportation fuels by 7.8% year on year in March, cutting crude throughput 4.3% over the same period, in response to demand destruction caused by the coronavirus pandemic, latest data from state-run Korea National Oil Corp. showed Monday.

The country's refiners produced a combined 29.19 million barrels of gasoil in March, down 8.4% on year, the KNOC data showed. Gasoline output fell 6.6% on year to 13.23 million in March, while jet fuel output fell 7.7% to 13.08 million barrels, the data showed.

"Local refiners have cut output of transportation fuels to adjust potential rises in stockpiles due to demand collapse from the COVID-19 pandemic," a Korea Petroleum Association official said. "In particular, stockpiles of jet fuel have increased due to the drastic drop in demand," the official added.

The country's jet fuel stockpiles rose 6.1% on year to 8.14 million barrels in March, the second-highest on record after hitting 10.09 million barrels in July 2018. South Korea's jet fuel stockpiles averaged 6.85 million barrels in 2019 and 6.68 million barrels in 2018.

The rise in inventory comes as the country's jet fuel demand plunged 65.5% on year to 1.14 million barrels in March, the lowest since November 2004. Over January-March, demand was down 23.1% on year at 7.34 million barrels.

Demand is expected to fall further in April due to the decrease in air traffic amid global coronavirus pandemic lockdowns, the KPA official said. South Korean carriers have gradually suspended most flights on international routes since late February due to the pandemic.

GASOIL DEMAND DOWN 12%

The country's gasoil demand fell 11.9% on year to 12.99 million barrels in March, and fell 13.9% on year to 37 million barrels over January-March, the KNOC data showed.

Gasoil stockpiles fell 3.9% on year to 11.94 million barrels in March but are likely to rise in April due to sluggish demand, the KPA official said.

South Korea's gasoline demand fell 15.1% on year to 5.79 million barrels in March, posting a third consecutive month of decline. Demand over January-March fell 12.6% on year to 17.86 million barrels.

Gasoline stockpiles fell 5.3% on year to 6.06 million barrels in March, but are also likely to rise in April due to sluggish demand, the KPA official said.

South Korean refiners cut production of LPG by 24.9% on year to 2.26 million barrels in March despite a steady rise in demand for petrochemical production.

The country's LPG demand rose 9.2% on year to 10.26 million barrels in March, marking the ninth consecutive monthly increase since last July. Over January-March, LPG demand rose 10% on year to 31.99 million barrels.

However, the sharp reduction in LPG output comes as stockpiles surged 45.8% on year to 4.51 million barrels in March.

GASOIL EXPORTS UP 32%

Domestic refiners shipped more oil products to overseas markets in March due to the drop in domestic demand.

Exports of gasoil jumped 32.2% on year to 18.2 million barrels in March, while jet fuel exports rose 12.4% to 9.83 million barrels in the month. In particular, South Korea's exports of refined oil products to Singapore almost trebled to 6.13 million barrels in March from 2.2 million barrels a year earlier.

Amid the sluggish demand and tank shortages, South Korean refiners processed 87.6 million barrels of crude in March, down 4.3% on year, the 11th consecutive month of decline since May 2019.

South Korea's crude stockpiles fell 14.4% on year to 45.52 million barrels in March, after refiners reduced crude oil imports for the seventh straight month amid a domestic economic slowdown.

The country's overall stocks of refined oil products rose 9.2% on year to 73 million barrels in March due to sluggish demand.