This photo shows GS Caltex Corp.’s new mixed feed cracking (MFC) facility in Yeosu, South Jeolla Province, about 320 kilometers southwest of Seoul, on Nov. 11, 2022.
SEOUL, July 31 (Korea Bizwire) — South Korea’s oil-refining industry reported disappointing second-quarter results due to weak oil-refining margins, although lubricants acted as a supporting factor.
During the second quarter of this year, SK Innovation Co.’s lubricant sales amounted to 1.1 trillion won (US$869 million), representing only 5.9 percent of its total sales.
Despite this, the lubricant business achieved an operating profit of 259.9 billion won in the second quarter, the highest among all of the company’s divisions, with an estimated operating profit-to-sales ratio of 23.4 percent.
S-Oil Corp.’s oil-refining business suffered an operating loss of 292.1 billion won in the second quarter, but its lubricant business posted an operating profit of 246.5 billion won.
According to HD Hyundai Oilbank Co.’s second-quarter financial results, the company’s operating profits plunged by 97 percent year on year to 36.1 billion won.
However, its lubricant business recorded an operating profit of 61.8 billion won, a dramatic increase of 110.2 percent from the previous year.
Market watchers noted that oil refiners expanded diesel output due to strong margins, which, in turn, impacted the price of lubricant oils.
During the oil-refining process, an increase in diesel output leads to a decline in the output of unconverted oil, a raw material for lubricant base oil, due to the nature of the process.
As for the second quarter of this year, the decline in oil prices acted as a cost reduction factor, resulting in an increase in the margin of lubricant base oils.
Kevin Lee (kevinlee@koreabizwire.com)
