South Korean oil demand grew by 0.13 mb/d y/y to 2.49 mb/d in October, with petrochemical feedstock demand, i.e. naphtha and LPG, accounting for almost 76% of total demand growth as steam crackers returning from maintenance ramped up throughput. Fuel oil demand continued to soar despite seasonally normal weather in October, rising by 30 thousand b/d y/y, as nuclear outages in the country continue to boost demand for the utility fuel. A total of 7.7 GW (34%) of South Korea’s nuclear generation capacity was offline in October, nearly double the 3.9 GW that was offline in October 2015. Demand for fuel oil will remain strong in November with the early arrival of winter and offline nuclear capacity rising to 9.8 GW. Jet demand continued to do well, rising by 9 thousand b/d y/y, but both gasoline and diesel demand fell, by 8 thousand b/d and 3 thousand b/d, y/y, respectively. Indeed, manufacturing PMI has contracted for the past three months and was at 48 in October, with the reported rate of job cuts the highest since January. The Korean Won has lost 4% since Trump’s election win, which may boost short-term exports.
Refinery runs picked up pace in October, rising by 0.17 mb/d y/y to 2.85 mb/d, in line with solid export margins. Crude imports were less impressive, growing by just 24 thousand b/d y/y in October, resulting in crude inventories drawing m/m by 3.9 mb. A rise in crude imports from Saudi Arabia (+0.13 mb/d) and Iran (+96 thousand b/d) was offset by declines from Russia (-36 thousand b/d) and Kazakhstan (-34 thousand b/d). Crude imports from the UK returned in October for the first time since April at 1.7 mb. Exports of gasoline stayed close to the year’s low of 0.17 mb/d as refineries continued to reduce gasoline yields, but fuel oil yields rose to the highest level in over three years, at 7.7% of refining throughput.