China has been a net base oil importer in the past few years, but supplies coming from abroad are decreasing as its domestic production is improving, and base oil exports are beginning to grow, an industry conference heard recently.
The country imported 1.8 million tons of base oils in 2022, down from 2.1 million tons in 2021, Argus Media analyst Dmitry Yudakov told the event held this month in Moscow.
“Imports of some grades such as high-viscosity [API] Group III, however, will continue in the future,” he told RPI’s International Lubricants conference Nov. 8.
Before the COVID-19 pandemic hit and slowed down the Chinese economy, the country imported much larger volumes of base oils, according to Argus. The country imported around 2.8 million tons in both 2018 and 2019, while in 2020 the number dipped to 2.5 million tons.
Chinese refiners have historically exported very little base oil, but the national government has tried to encourage the practice in recent years, and in 2022, base oil exports reached a record quantity of 144,000 tons, up 28% from 112,000 tons in 2021. The quantities exported in the previous years were minuscule – from 2018 to 2020 they stood at around 25,000 tons annually, Argus found.
“A range of Chinese producers are eyeing opportunities to export more base oil,” Yudakov said. “Their improving quality and abundant capacities contribute to the increasing exports.”
The consultancy found that India’s base oil imports slowed in the past few years, as more competitively-priced crude imports boosted production yields.
Asian total base oil exports are influencing the prices in other regions of the world, according to the firm.
“The United States’ and Europe’s Group I and Group III base oil prices were influenced by increasing Asian exports,” Yudakov said. “In the 18 months leading to July 2023, U.S. and European prices were closely following Asian imports and were dropping when exports improved.”