MOSCOW (MRC) -- South Korea's oil product demand in October rose 11.7% from a year earlier, driven by robust transportation fuel consumption amid rapidly easing COVID-19 restrictions, but major refiners raised concerns that new coronavirus variant could spur a new phase of lockdowns and curb consumer fuel demand recovery, reported S&P Global.
The country consumed 78.19 million barrels, or an average of 2.52 million b/d, of refined oil products last month, compared with 69.97 million barrels a year earlier, data released by Korea National Oil Corp. showed Nov. 29.
For the first 10 months of 2021, South Korea's oil product consumption rose 5.6% year on year to 770.89 million barrels, the KNOC data showed.
Transportation fuels, especially gasoline and jet fuel, led the country's October oil consumption increase as the government started to rapidly ease movement restrictions across the nation since mid October.
Gasoline demand in October rose 1.4% year on year to 6.72 million barrels. Over January-October, gasoline consumption increased 4.6% year on year to 69.87 million barrels, the KNOC data showed.
In addition, jet fuel demand climbed 13.1% year on year to 1.99 million barrels in October, rising for the third straight month, with an increased number of people taking domestic flights. Some international flight routes also started to open up from October, with fully vaccinated individuals permitted to travel between South Korea and Singapore without quarantine since last month.
Seoul's decision to shift to a phase of living with COVID-19 from Nov. 9, could further support South Korea's demand for the middle distillate fuels, refinery and industry sources told S&P Global .
In addition, the government has lowered taxes on auto fuels by as much as 20% for six months from November in an effort to lower retail automotive fuel prices and tame accelerating consumer inflation. Taxes account for about 50% of the retail gasoline price, 40% of the diesel price, and 30% of the butane price, which have prompted consumers to ask for a tax reduction.
Despite the recent improvement in domestic consumer demand, as well as rising middle distillate exports, South Korea's major refiners including SK Innovation, S-Oil Corp. and Hyundai Oilbank indicated that the industry is wary of a rapidly spreading new coronavirus variant that the health minister of South Africa announced Nov. 25.
In addition, middle distillate marketers and distribution managers at the refiners warned that there is a growing possibility the South Korea government may consider scrapping the 'living with COVID-19' phase and implement new rounds of restrictions, or lockdowns, should the number of infection cases continue to move higher.
"The major refiners have been ramping up crude throughput but the rising refinery runs could come to a halt if new rounds of restrictions or lockdowns are announced," a middle distillate marketer at S-Oil Corp. said.
The country's nationwide run rates averaged around 81% in the first 10 months, according to latest data from Korea Petroleum Association and industry information collected from major the refiners by Platts.
As MRC informed earlier, Hyundai Chemical, a JV between South Korea’s Lotte Chemical and Hyundai Oilbank, has started to market cargoes from the new polypropylene (PP) plant in Daesan in mid-November. Chinese customers informed CommoPlast of having received offers for on-spec cargoes of homopolymer of propylene (homopolymer PP) from its newly launched plant.
According to MRC's ScanPlast report, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.