BMI View: South Korea will maintain its position as a regional and global refining heavyweight, while itsproduction slate evolves to prioritise light distillates and petrochemicals yields in accordance with demandtrends. Demand for natural gas and gasoline will particularly benefit under the new Moon Jae-Inadministration, given the new president's desire to lessen the country's reliance on these energy sources, atthe expense of coal, nuclear and emission-prone diesel.
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South Korea is a refining powerhouse and exports a broad range of refined fuel to markets in the Asia-Pacific region, Europe, North America and Latin America. Crude oil imports and refined fuels productionin 2017 are set to grow by 1.2% and 1.0% y-o-y, respectively, driven by strong demand for lightdistillates (gasoline, jet fuel), petrochemicals and lubricants both at home and in overseas markets.
Beijing's continued exclusion of its independent teapot refineries in allocating fuel export quotas is apositive development for South Korean refiners. Easing of the glut in the regional market will supportprices and margins, benefitting large fuels exporters such as South Korea.