South Korean oil demand growth was broadly flat y/y in October, at 2.18 mb/d. Naphtha demand was once again the stand-out feature, growing y/y by 74 thousand b/d as crackers across the country continue to run at elevated utilisation rates. However, naphtha margins in Asia have fallen substantially this month, given the influx of naphtha from the West and higher Indian exports, and are likely to weigh somewhat on November's demand. Nonetheless, overall demand remains stable, with top ethylene maker Honam seeking cargoes for second-half December delivery earlier today. South Korea has overtaken Japan as the second largest ethylene maker in Asia, after China, following recent expansions and upgrades, with a total cracking capacity of 8.12 mt/year. Meanwhile, diesel demand fell y/y for the fourth consecutive month, weaker by 13 thousand b/d (1.7%). Gasoline demand was stronger y/y by 15 thousand b/d (1.5%), up for the second month in a row. Fuel oil demand fell y/y for the second month running, while kerosene demand continued its trend of y/y decline seen through most of the year. With the winter anticipated to be slightly warmer than average to average at best, we expect little support for kerosene.
Refinery runs increased by 0.8% y/y and 3.2% m/m, to 2.88 mb/d, while oil product imports were up by 7.7% y/y to 0.73 mb/d and exports were higher y/y by 14.5%, totalling 1.27 mb/d.
Crude oil imports decreased y/y by 0.06 mb/d (1.2%). As we anticipated, imports from Iran bounced back to their strongest levels since April, at 0.19 mb/d, as Iran offered up to $1 billion in insurance cover. Both crude and product stocks fell m/m and remained below the five year average.