S Korea’s upbeat domestic LPG sales boon for US suppliers
South Korea’s major LPG distributors maintained an upbeat domestic sales projection for the year on the back of robust feedstock requirement for petrochemical products that support the manufacture of medical goods as well as an increase in heating fuel usage, which support the consumption outlook for LPG.
Subsequently, South Korea’s healthy LPG demand bodes well for US suppliers as major local distributors typically source the bulk of the product from the North American producer.
The country’s leading LPG distributor and importer, SK Gas, aims to increase sales in the domestic market to 4.4 million mt for full year 2020, up 5.8% from 2019, a company official told S&P Global Platts.
“The company will push to further raise LPG sales to more than 5 million mt in 2025 as domestic LPG demand is expected to trend higher on the back of stronger demand for petrochemicals as well as [South Korea’s rapid] shift towards cleaner auto fuels,” the SK Gas official said.
LPG sales among other major distributors were also upbeat to-date this year.
LPG sales by South Korea’s second-largest supplier, E1 Corp., rose 7.9% year on year to 2.121 million mt over January-September.
Major cities were stocking up on heating fuel ahead of winter, while LPG requirement as a petrochemical feedstock remains strong. Demand for polypropylene and polyethylene especially — essential for the making of mask filters and protective medical suits and gears — are surging, industry and market sources said.
South Korea’s LPG demand rose to 91.8 million barrels over January-September, up 4.7% from 87.64 million barrels in the same period a year earlier according to latest data from state-run Korea National Oil Corp. which provides LPG data on barrels basis.
LPG consumption for petrochemicals output that accounts for more than half of total demand climbed 19.2% year on year at 47.66 million barrels in the first nine months.
Transport sector lags
However, local refiners have failed to post healthy sales in the domestic market as LPG demand from the transportation sector declined due to the prolonged coronavirus pandemic.
LPG demand in the country’s transportation sector fell 11.6% year on year to 22.04 million barrels for the first nine months, the KNOC data showed.
LPG sales by S-Oil Corp. declined 5% year on year at 473,000 mt over January-September, while Hyundai Oilbank’s sales also dipped 9.8% year on year to 211,000 mt in the same period.
Reflecting the country’s tepid transportation fuel demand, refinery feedstock imports from the US fell to 92.91 million barrels in the first ten months, down 17.5% from the same period last year, according to latest data from Korea Customs Service.
Most US crudes that South Korean refiners purchase tend to consist of WTI and Eagle Ford, but companies have been reluctant to buy high volumes of the light and middle distillate-rich refinery feedstock due to dismal domestic demand for gasoline, jet fuel and diesel, Platts reported previously.