China’s base oil imports fell below 1.5 million metric tons in 2025, reaching its lowest point in recent years, declining slightly from 2024 levels, according to data from lubricant industry consulting firm ICIS.
Whitney Shi, a Shanghai-based analyst at ICIS, attributed the decline to a combination of a sluggish national economy and significant overcapacity in API Group II and Group III oils. Speaking at the annual China International Lubrication Industry Conference on March 24 in Shanghai, Shi said Chinese companies are increasingly prioritizing locally produced base oils to ensure supply chain stability.
Also, Chinese produced Group III oils have become highly competitive in quality and pricing, making them more appealing than imported alternatives. However, Shi noted a potential opportunity for overseas suppliers due to shifting regional dynamics.
“Prices of Group II oils from other refiners in Asia might be more competitive due to ExxonMobil’s new facility in Singapore,” Shi said. The facility on Jurong Island began operations in the second half of 2025 and serves as a major supplier for Southeast Asia. Shi suggested that Chinese buyers may soon be able to acquire lower-priced Group II oils from refiners in Thailand, South Korea, and Taiwan as they adjust to the new competition.
South Korea has long been the primary exporter of Group II and Group III oils to China, but its market share is eroding. In 2025, Korean oils accounted for 33% of all imports, down from 35% in 2024. Conversely, Singapore and Qatar saw their export shares rise by 1% each, reaching 26% and 16% in 2025.
China still demands Korean group III base oils due to compliance with OEMs’ engine oil formulas. But Shi warned a shortage in supply due to the ongoing Iran conflict that blocked Hormuz Strait, a chokepoint for crude oil shipment bound for Asia.
Although China’s crude reserves prevented a shortage in Q1 2026, base oil prices are expected to rise in Q2. Shi noted that even if the conflict might be over soon, damaged refining facilities in the Middle East will take time to restart, limiting Group III supply.
ICIS expects China to expand its export footprint in Southeast Asia and the Middle East. In January, Sinopec shipped the country’s first-ever overseas batch of Group III oils. China exported more than 210,000 tons of base oils in 2025, nearly double the volume in 2021.