SK Lubricants projects 3.5% average growth in global Group III base oil demand
SK Lubricants’ performance in 2017 is forecast to improve 10% over last year, as it expects average growth rate in Group III base oil demand outpacing growth in global finished lubricants demand.
In 2016, SK Lubricants posted KRW2.54 trillion (USD2.22 billion) in sales and KRW468.3 billion (USD409 million) in operating profit.
This year, the company expects to make KRW3.17 trillion (USD2.77 billion) in sales and about KRW510 billion (USD445.85 million) in operating profit.
The South Korean company expects to achieve record performance in the second half of 2017. It has already exceeded market expectations in the first half, with KRW215.1 billion (USD188 million) in operating profit. Stock market analysts expects SK Lubricants, which is part of SK Innovation, to post annual profit in excess of KRW500 billion (USD437 million).
The company produces and exports Group III base oils, which is used to formulate high-quality finished lubricants, to more than 140 customers in 50 countries. It is the world’s largest producer of Group III base oils, with a 35% market share in an approximately 680,000 barrel global market in 2015. SK Lubricants projects that growth in Group III base oil demand will outpace the 1-2% growth in finished lubricants. Its forecast is an average 3.5% growth every year, lubricant manufacturers continue to switch from Group I base oil to higher quality Group II and Group III base oils.