China’s demand for imported API Group II and III base oils remained weak in 2024, speakers said at the Enmore China International Lubrication Industry conference in Shanghai.
The country is pushing to grow its rerefining business, which reduces reliance on imports.
China imported 1.54 million tons of base oils in 2024, down 12.3% from 2023, marking the fifth consecutive decline since 2020, according to market intelligence company ICIS.
Chinese refined Group II oils are sufficient to meet domestic demand. Less widely known is that Chinese Group III oils derived from coal are gaining ground on foreign suppliers, said ICIS analyst Whitney Shi.
“Chinese Group III oils are highly competitive in terms of cost and quality, so they are more popular than imported options among Chinese clients,” Shi said, adding the only sector that saw slight growth in 2024 was Group I oils, particularly bright stock, which is imported mainly from Thailand and Saudi Arabia.
Base oil exports, primarily by Sinopec, continued to grow in 2024 to 170,000 tons, up 8% year on year. Main destinations included with Singapore, where Sinopec operates a finished lubricant blending plant and a logistics center, India and the Middle East.
China produced more than 5 million tons of base oils in 2024, up 7 year on year. The growth rate slowed to under 10%, aligning with the government policy aiming to curb overcapacity, particularly in Group II oils. Instead, the Chinese government allowed small capacity expansions of Group I oils, such as CNPC’s newly added 100,000 t/y facility in Fushun late last year.