SHANGHAI – China’s plan to encourage manufacturers in key industries to replace old equipment could lead to more rerefined base oil production and finished lubricant sales in the country, speakers said at the China International Lubrication Industry Conference hosted here by Enmore March 20.
“China’s rerefined oil market used to be dominated by small, poorly equipped workshops, but in recent years we have seen more big players in the field, thanks to supporting policies and the demand for better quality rerefined oils,” Liu Yanbing, an official from China national resources recycling association, said at the conference.
He was referring to tax policies that encourage use of rerefined base oils and finished lubricants made with such base stocks. For example, China provided consumption tax exemptions for rerefined base oils and lubes blended with them in a five-year policy implemented in 2013 and renewed twice since then.
Liu said China collected an estimated 6.5 million metric tons of waste lubricants in 2023 and produced about 1.4 million tons of rerefined base oils.
“It’s a sizable achievement for our industry,” he said. Small workshops no longer have a place in most areas in China, he added, as local governments only allow rerefining facilities to operate if their capacity is at least 30,000 t/y. Some operations are much larger, such as Shandong province-based Dongying Guo’an Chemical, which claims production capacity of 200,000 t/y.
Hydrotreating used to be rare in China’s rerefining business, but Liu said seven or eight companies now have such units, having installed them in response to demand for better quality.
“People realized only with such a process will they get the desired quality of gas, diesel and base oils,” he said.
One driving force behind the development of China’s rerefining market is the active participation of big refineries that aim to improve their environmental, social, and governance scores.
“Companies like ExxonMobil, Shell and Sinopec are eager to work with rerefiners as they want to buy high quality rerefined base oils for the final products, to cut their carbon footprint,” Liu said.