SHANGHAI – China has for years been the world’s largest importers of base oils and barely an exporter, but both of those numbers are now trending in the opposite direction.
Base oil exports topped 150,000 metric tons in 2023, rising 11% from 2022, an ICIS official said at the China International Lubrication Industry Conference hosted here by Enmore March 20.
Imports, meanwhile, fell 2% to 1.8 million tons, the fifth consecutive year of decline.
According to ICIS, most of the exports were API Group I and II oils produced at Sinopec refineries in Shanghai and Maoming, China, and the primary destinations were India, Singapore and countries in the Middle East.
ICIS predicted that base oil imports will continue to fall as China continues to rely on Chinese-made Group II oils. The decline in imports came after a huge surge in domestic base oil production capacity. The country now ranks first globally for base oil supply base, but many plants operate significantly below capacity. In addition to the large domestic overhang in capacity, their plight was hurt by a stall in the nation’s economy, which caused a decline in domestic finished lubricant demand.
China historically has exported little base oil, partly because the domestic market offered so much opportunity, partly because exporters were required to obtain licenses that were not easy to get. In recent years the national government encouraged more base oil exports, and some refiners said they intended to take advantage, but shipments have yet to take off.
Exports of some products are taking off, according to other conference speakers. The country sold 4.9 million vehicles overseas in 2023, a 58% jump from 2022. Among them were 1.2 million electric vehicles, representing a 78%, according to the China Association of Automobile Manufacturers.
The industry may have difficulty matching that pace this year. The European Union market, which was a major Chinese EV buyer last year, launched an investigation in October into allegations of unfair government subsidies to China’s industry. China’s EV exports to the EU in the first two months of this year dropped about 20% from a year ago, according to China Customs.
“China will continue to sell vehicles abroad this year, but the growth won’t be as impressive as last year,” Zhou Yanting, chief economist of the Asia-Pacific region at the British consulting firm Wood Mackenzie, said at the conference.