South Korean oil demand contracted further in June, down by 0.11 mb/d y/y, as ongoing regional trade tensions dampen economic activity, leading overall Korean exports to shrink for the seventh consecutive month (-13.5% y/y). Heavy petrochemical cracker maintenance in June (+0.18 Mt more ethylene capacity offline y/y) led to a 90 thousand b/d y/y fall in naphtha demand. LPG demand fell by 17 thousand b/d y/y, driven by butane (-24 thousand b/d y/y), while propane demand grew (+7 thousand b/d y/y) on improved margins. In July, higher cracking margins and flat y/y maintenance should support petrochemical feedstock demand. Diesel demand contracted by just 7 thousand b/d y/y as the country’s manufacturing PMI fell to 47.5 in June (from 48.4 in May), due to falling new orders and auto sector weakness. Gasoline demand ticked up by 9 thousand b/d y/y as retail prices were flat m/m at $1.30 per litre.
Refinery runs fell by 0.21 mb/d y/y to 2.8 mb/d in June as persistently weak margins led to run cuts. June crude imports slumped y/y by 0.41 mb/d (-12.5%) to 2.86 mb/d, on the back of a second consecutive month of lower flows from the Middle East (-0.55 mb/d y/y in June after a 0.25 mb/d y/y fall in May) and zero imports from Iran. These declines were marginally offset by higher imports from the Americas, which grew y/y by 0.24 mb/d. Product imports fell by 7 thousand b/d y/y to 0.94 mb/d, with an increase in naphtha imports (+40 thousand b/d y/y) offset by a fall in imports of butane (-36 thousand b/d y/y) and fuel oil (-23 thousand b/d y/y). Product inventories increased by 1.0 mb m/m to 62.7 mb in May. Crude stocks rose by 1.6 mb m/m to reach 53.8 mb on lower runs, significantly higher than the five-year average of 36.4 mb.