Fierce competition and weak demand are pushing small companies in China’s lube industry to dig deeper to find opportunities, said speakers at an annual lubricant event held in Xi’an, Shaanxi province. Heavy-duty engine oils could be the avenue of growth they’re looking for.
China is the world’s second-biggest finished lubricants market. Before the pandemic, demand was about 7.5 million tons per year. U.S.-based industry consultancy Kline & Co. predicts this will decline to 6 million tons by the end of the decade.
Shi Defeng, president of Beijing-based Haohui Weiye Petrochemical, said at the event that competing against high-quality, inexpensive API Group II and Group III base oils has always been a challenge for manufacturers of non-conventional base stocks. Haohui Weiye Petrochemical is one of the first Chinese companies to sell synthetic base oils domestically.
By talking to lube blenders, his company realized that it is not only price and quality that kept customers tied to conventional base oils and avoiding synthetics. Inexperience of blending such products is also a factor.
“Most blenders don’t know how to use [synthetic] base oils to achieve the best result in a cost-effective way,” Shi said. “We recently started to help clients develop lubes blended with alkylated naphthalenes, and it has been very successful,” said Shi.
Haohui Weiye Petrochemical develops products using alkylated naphthalenes, including a range of base stocks for automotive, chain oil and greases, among others.
Alkylated naphthalenes originated from the U.S. during World War II to compensate for the scarcity of mineral oil. Mass production took off in the 1990s when ExxonMobil reintroduced alkylated naphthalenes into the lubricants market, citing significant performance benefits and advantages in combination with polyalphaolefins. They have excellent thermo-oxidative stability, reduce volatility in the blend, cut down on the need for anti-wear additives and have good solubility properties.
“We got positive feedback from heavy-duty vehicle drivers, who said our solutions fixed some major headaches such as evaporation loss,” Shi said. “This made me think that there are still opportunities in the lube industry despite the seemingly dire market.”
Another way to remain competitive is to more closely track base stock prices, said Ye Shixin, general manager at Hong Shi Yue, a gear oil and hydraulic fluid blender in Xingping county, Shaanxi province. This means the company can offer cheaper alternatives to imported finished products by using high-quality base stocks and maintaining quality.
“Substitutes don’t mean poor quality,” Ye said.