Chinese suppliers need to invest in high value-added products to stay competitive, urged former general manager of Sinopec at a recent industry conference in Shanghai.
Like many other industries in China, lubricant blenders are grappling with domestic overcapacity. A growing number of Chinese companies are looking for overseas customers to escape intense competition at home. After the implementation of tariffs on Chinese imports by the U.S., inbound investment has plummeted, pushing exporters to look elsewhere.
China exported 260,000 tons of finished lubricants in 2024, up 10% from 2023, according to China Customs.
“There are no tax rebates for lube export, so pricewise Chinese suppliers don’t have much advantage,” said Zhang Chenhui, an industry veteran and former general manager at Sinopec, during a presentation.
Instead, Zhang suggested suppliers look at immersion cooling for data centers, lubrication products for EVs, robots and biobased lubes.
Biobased lubricant is a niche sector in China but has gained more traction over the years, said Kline & Co. analyst Duan Feili.
“We are starting to see Chinese companies are investing in biobased oils to catch up with global players,” she said.
China’s bio-based lube market penetration is only 0.5%, compared with 6% in Germany, said Duan. Kline projects a 7% CAGR for the sector in China from 2023 to 2033.
Chinese blender Tongyi in 2023 launched its first biobased engine oil under the brand Himalaya ECO. The USDA-certified product, SP 0W20, claims it contains 89% biomass.