Richful Builds Additive Plant After IPO


Richful Lube Additive Co. plans to build its second factory – located in Cangzhou, Hebei province, China – after conducting an initial public stock offering late in November to raise funds for the project.

In its first phase, the company intends the plant to have capacity to make 60,000 metric tons per year of lubricant additive components and 12,800 t/y of additive packages. The target timeline calls for the facility to open in two years, but an official said it could be delayed because of the current pandemic.

Get alerts when new Sustainability Blog articles are available.


“Our schedule calls for launch in two years, but it possible that it will take longer because of COVID-19,” Richful Marketing Coordinator Jeffrey Wang said during a telephone interview.

Richful, which is based in Xinxiang, Henan province, offered 35 million shares of stock in the IPO – a quarter of the company’s total outstanding shares – on the ChiNext section of the Shenzhen Stock Exchange. It raised ¥1.13 billion (U.S. $173 million) and had ¥1.04 billion left after expenses.

The company said it is building the new production facility both to meet growing demand for its additives and to help it shift its business from components to packages, which are more lucrative but also more difficult to supply since requires significantly more know-how to develop lubricant formulas. For the past two decades, four companies – Lubrizol, Infineum, Chevron Oronite and Afton Chemical – have been the world’s main suppliers of lube additive packages.

“Demand from our customers has been growing very fast,” Wang said. “We have already been trying to shift to packages. It is a difficult transition.” Breaking into the additive packages business requires new personnel and large investments in research and development as well as equipment and facilities, he said.

Richful’s existing production site, which is in Xinxiang, has capacity to make nearly 100,000 t/y of components and 15,000 t/y of packages. Plans for the Cangzhou facility call for it to eventually expand to 90,000 t/y of packages.

Components that the company supplies include detergents and total base number boosters based on sulfur and calcium; polyisobutylene succinimide dispersants; phenolic and ashless antioxidants; and zinc dithiophosphates used for antioxidant performance and corrosion inhibition. Its packages are for passenger car engine oils meeting specifications that range from API SE to API SN and heavy-duty engine oils meeting API CD to API CH-4, as well as engine oils used in motorcycles and engines running on compressed natural gas.

Wang said the company’s sales are growing both within China and overseas and that exports should account for 40% of sales this year.

In its prospectus for the IPO, Richful reported a net profit of ¥98 million for 2019 on sales revenue of ¥657 million.

The price of Richful’s stock reached ¥102 per share on the day of its offering and climbed to above ¥107 a few days later, but by yesterday it had fallen below ¥76.

Related Topics

Additive Components    Additives    Asia    China    Market Topics    Region