Chinese base oil producers are increasingly looking to export material as expanding domestic production reduces the country’s reliance on imports, according to a senior industry executive.
Speaking at a recent ICIS industry event, Gan Xue Yun, deputy general manager of state energy company Sinopec, said China is becoming more self-sufficient in higher-quality base oils while positioning itself as a larger participant in the global market.
“Supply will get stronger with additional capacity and imports are slowly going down. China will play a bigger role in the global market,” he said, adding that Chinese producers are actively exploring export opportunities.
China is the largest lubricant market in the Asia-Pacific region, accounting for 38% of demand, followed by India at 23%, Japan at 14%, South Korea at 6% and Southeast Asian countries making up the remainder.
Gan said China’s lubricant market is shifting toward higher-performance products. “China’s lubricant market is upgrading. With the development of China’s economy, the demand for high-end base oils will rise.”
API SP and higher engine oils currently account for more than 22% of the market and are expected to reach 64% by 2030. “Every 10 years, the standard goes up. Those that cannot keep up will lose their place in the market,” he said.
API Group II base oil remains the dominant grade, with domestic production capacity rising from less than 15% of total capacity to 51% over the past decade. Meanwhile, Group III base oils now account for 20% of market demand.
Gan said China is expected to add 200,000 metric tons per year of Group II and Group III production capacity over the next five years. During the 2030s, demand for higher-quality base oils, including Group III, polyalphaolefins and coal-to-liquids base oils, is projected to reach 800,000 t/y.