A Rarity for China: Overseas Lube Sales


SINGAPORE – China built its economic powerhouse largely on high volumes of exports of a wide variety of products. Lubricants was not one of them, because of regulations on the energy industry.

One private marketer is ahead of the curve, though, when it comes to selling lubricants overseas. Shandong Yuangen Petroleum Chemical Co. already ships lubes to Thailand and Africa and is planning to expand to other countries.

As far as I know, we may be the first privately owned Chinese lubricant company to sell our lubricants overseas, said President Yao Lian Zhi, who discussed Shandong Yuangens operations June 10 during a presentation here at the ICIS Asian Base Oils & Lubricants Conference.

Shandong Yuangen is based in Jining city, in eastern Chinas Shandong province, but the key to its overseas sales is an agreement by which its products are toll-blended in Singapore by Performance Oil Pte. According to Yao, private companies in China are not allowed to export lubricants.

[Due to] export restrictions imposed on private blenders, when there is enough consumption volume, we may set up our own plants overseas, Yao explained.In October, Shandong Yuangen began exporting products from Performance Oils plant to Thailand. Most of those products are industrial lubricants supplied to rice milling factories.

We started contract manufacturing in Singapore to produce our [Yuan Yin] brand of lubricants for export to Thailand,and we plan to set up our own plant overseas when there is sufficient demand, said Yao.

Shandong Yuangen declined to disclose sales volume, but Yao added, We are already exporting to Africa and plan to expand to Vietnam.

Commenting on trends in China, Yao told the conference, There are 3,000 independent lubricant players in China having a 30-percent market share, and demand for low-viscosity engine oil will increase in the future with new emission legislations and stringent laws.

Shandong Yuangen Petroleum Chemical was set up in 2002. The company claims to have base oil storage capacity of 20,300 metric tons, additives storage capacity of 1,600 tons and a 10,000 square meter warehouse with capacity to stock 4,500 tons. The companyproduces lubricants for automotive, construction and industrial applications, greases and specialty oils.

Performance Oil is a Singaporean lubricant and specialty chemical supplier, and according to the companys website, more than 90 percent of its products are exported to Southeast Asia. It has 1,000 tons of base oil storage space and a 200-ton blending tank.

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