Increase in Petroleum Product Exports After One and a Half Years

Post-Pandemic Economic Recovery Expectations
111.82 Million Barrels Exported in Q3

[Asia Economy Reporter Choi Dae-yeol] The export volume of petroleum products by the domestic refining industry has turned to an upward trend after a year and a half. Due to COVID-19, demand had sharply declined, causing exports to shrink, but recently, as vaccination rates have increased worldwide and expectations for economic recovery have risen, demand has grown. Jet fuel, which had hit bottom, is showing signs of recovery, so exports are expected to increase further by the end of this year or next year.

According to the petroleum product export status compiled by the Korea Petroleum Association on the 26th, the volume exported by the domestic refining industry in the third quarter of this year was 111.82 million barrels, an increase of 0.6% compared to the same period last year. This is the first time in six quarters since the first quarter of last year, when COVID-19 spread worldwide, that petroleum product exports have returned to an increase compared to the same period of the previous year.

Petroleum products, refined from crude oil, include diesel, gasoline, jet fuel, and naphtha, and are among South Korea's main export items. The export value of petroleum products in the third quarter was $9.026 billion, an increase of about 70%, ranking fifth among South Korea's major export items. It is the first time in eight quarters since the third quarter of 2019 that the export value exceeded $9 billion. Profitability has also improved. The export profitability, calculated by subtracting the crude oil import price from the petroleum product export price, rose by about $1.9 to $7.1 per barrel compared to the third quarter of last year.

South Korea's largest export destination changed as China, which had been ranked first for the past five years, dropped to third place, while Singapore rose to first place. This is interpreted as a result of Chinese government imposing import consumption taxes on some products, reducing export volumes, and refiners shifting volumes to other countries such as Singapore. By product, jet fuel increased by 3.2% compared to the same period last year, and the industry views this as having passed the bottom.

The increase in exports is due to the growing demand for petroleum products amid expectations for economic recovery worldwide. Each country has clearly moved toward resuming daily life, such as transitioning to a 'With COVID' system. A Korea Petroleum Association official said, "If the base effect from last year and the recovery in demand for products such as heating oil and jet fuel during the winter season coincide, petroleum product exports will steadily increase," adding, "This will improve the profitability of the refining industry and contribute to national exports."