Korea’s four major oil refiners are posting a gradual drop in their exports to China. They are diversifying their export destinations to Australia, Japan, and other countries to fill the void. China used to be Korea’s top petroleum product export market.
According to the Korea National Petroleum Association on Feb. 12, the four major Korean refiners -- SK innovation, GS Caltex, S-OIL and HD Hyundai Oilbank -- exported US$46.4 billion worth of petroleum products in 2023. The largest amount (US$10.5 billion) was exported to Australia (18.3 percent of the total exports), followed by Singapore (US$5.4 billion and 12.4 percent), Japan (US$4.6 billion and 9.9 percent), the United States (US$4.3 billion and 9.3 percent), and China (US$3.5 billion and 7.5 percent).
China’s ranking descended by one spot to fifth place from 2022. The country was the largest exporter of petroleum products from Korea for six consecutive years since 2016. It had not dropped below second place since 1993. However, in 2022, it suddenly fell to fourth place. This was due to China’s strict lockdown policy aimed against the spread of the COVID-19.
Australia marked a steep spike in importing Korea’s petrochemical products. Australia has had to rely on imports to make up for supply shortages caused by refinery closures at British Petroleum (BP) and ExxonMobil. The Korean refining industry quickly ramped up exports to Australia. Australia became Korea’s top petroleum product export destination in 2022 and 2023. Two factors influenced Australia in choosing the Korean refining industry: a low share of Russian crude oil in Korean petrochemical products (less than 5 percent) and Korea’s ability to sustainably produce high-quality petroleum products in large quantities.
Even last year when the Chinese market reopened, Korea’s petrochemical exports to China did not increase significantly. Both the value and volume fell. This means that Korea’s petrochemical exports to China shrank in 2023 from 2022.
Korean refineries already export petroleum products not only to places Asia such as Japan and China but to countries in the West like the United States, France, and the United Kingdom. They also export to countries in Africa such as Angola and Kenya and to the Middle East such as the United Arab Emirates (UAE), Oman, and Saudi Arabia. The number of their export markets grew fast from 58 in 2021 to 64 in 2022 and 70 in 2023.