The refinery, a wholly owned subsidiary in Beijing, finished building the Group II plant in 2013, but never opened it because China had a glut of Group II oils that depressed prices to the point that Sinopec did not deem it worthwhile open the facility.
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Since the nation’s lubricant market has grown, as has its appetite for Group II and III base stocks, and prices have improved – even for fluids produced domestically. The company decided to take advantage by opening the plant and in mid-September completed the process of beginning operations and bringing products on specification, according to China Petrochemical News Network.
The company expanded the size of the unit since 2013. Originally it was built with capacity to produce 250,000 metric tons per year of Group II oils, but it now can make 450,000 t/y of Group II oils and white oils, the network reported.
White oils have become a popular product for Chinese refiners in recent years as they consider them to be higher-margin petroleum products.
Refining units often deteriorate if left idle for very long, and the process or starting Yanshan’s Group II unit war arduous. It took 26 months before the company was satisfied with performance of the plant – in particular a hydrogenation unit that was the main piece of the construction project.
The Yanshan refinery formerly operated an older base oil plant with capacity to make 250,000 t/y of Group I oils, but that facility was closed around the start of 2016.
Along with an improvement in profit margins for base oils, Sinopec’s decision to open the base oil plant was influenced by shrinking margins for motor fuels. Officials said they are focused on increasing production of higher-margins products.