Seoul—South Korea's crude imports tumbled to the lowest level in more than seven years as refineries maintained low run rates due to faltering domestic fuel consumption in the aftermath of the coronavirus pandemic, showed latest data from state-run Korea National Oil Corp., KNOC.
The world's fifth biggest crude importer received 69.534 million barrels, or 2.32 million b/d, of refinery feedstock in November, down 25.3% from 93.102 million barrels a year earlier.The import volume of 69.534 million barrels was the lowest monthly shipment since April 2013, when the country imported 69.115 million barrels.
For the first 11 months of this year, South Korea's crude imports fell 8.8% year on year at 895.81 million barrels.
South Korea's refinery feedstock imports are poised to trend sharply lower over the coming trading cycles due to dismal domestic transportation fuel consumption, industry sources and analysts told S&P Global Platts.
The country currently suffers the worst COVID-19 crisis since the outbreak in January, prompting the government to tighten social distancing measures.
S Korea's infection cases have been hovering about 1,000/d for the past two weeks and hit a record high of 1,241 Dec. 25, jumping from some 100 cases/d in early November.
December refinery run rates are estimated to be cut by at least 8 percentage points from November while jet fuel and diesel production would be lowered over the coming weeks as domestic consumption remains tepid, according to plant operation managers at four major South Korean refineries surveyed by Platts.
The country consumed 71.28 million barrels, or an average of 2.38 million b/d, of refined oil products last month, down 10.5% from 79.69 million barrels a year earlier. It marks the sixth consecutive decline in the country's fuel demand, and the 10.5% decline was the biggest slump in three months after falling 11.9% in August.
US vs. Middle EastSouth Korea's crude imports from the US in November almost halved from a year earlier, marking the seventh consecutive decline.
South Korean refiners imported 6.541 million barrels of US crude in November, down 46.5% from 12.025 million barrels they received a year earlier, the KNOC data showed. The November shipments from the US were also down 28.1% from 9.096 million barrels in October.
The country is poised to surrender its top Asian US crude buyer status in 2020 as China has been actively purchasing light sweet and medium sour US grades since the late third quarter as Beijing steps up efforts to comply with the Phase 1 trade deal it struck with Washington in January.
The country's crude imports from its Middle Eastern suppliers also decreased last month, with shipments from the UAE falling to the smallest in 28 years.
Still, the share of Middle Eastern crudes in South Korea's import basket in the first 11 months was 68.8%, higher than the 67.1% in 2019 and 68.4% in 2018, according to Platts calculations based on KNOC data.
The share of Middle Eastern crude increased this year as local refiners find their staple Saudi Arabian oil to be the most reliable and economical feedstock option in times of market uncertainty.
The country's crude imports from its top supplier Saudi Arabia in November climbed 3% year on year at 24.625 million barrels. The November Saudi Arabian crude shipment marks the third consecutive monthly increase.
South Korean refiners paid an average outright price of $43.70/b for Saudi Arabian crude imported so far this year, sharply lower than $52.56/b paid for shipments from the US.
On the contrary, South Korea paid on average $65.17/b for crude shipments from the US in 2019, cheaper than an average $66.87/b paid for Saudi Arabian crude cargoes received in the same year.
"Buying arbitrage cargoes and exotic crude grades is considered as a bit of a gamble and luxury ... luxury that we cannot afford during times of weak fuel consumption and volatile prices," a feedstock trading manager at a major South Korean refiner said.
