Already in the midst of building its second factory, Richful Lube Additive Co. last week unveiled plans to expand its existing chemical manufacturing facility, part of its strategy to transition from lubricant additive components to the supply of additive packages.
The company, which is based in Xinxiang, China, said it aims to take advantage of a trend among China industry to replace foreign materials with domestic alternatives.
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Richful’s existing additive plant is in Xinxiang, in the central province of Henan, and has capacity to make 100,000 metric tons per year of individual lubricant additive chemical components and 15,000 t/y of additive packages. A year ago it announced plans to build a second factory in Cangzhou, in the eastern coastal province of Hebei. The latter facility is under construction.
In a Dec. 25 filing on the Shenzhen Stock Exchange, Richful said its board of directors had approved a plan to build additional production capacity at the Xinxiang site, which is also its headquarters. The filing listed the capacity of the project as 150,000 t/y, but it was not clear whether that represented the size of the increase or the future capacity of the overall site after the project.
Richful did say that the new project would include additional capacity for additive components and packages. Specifically it said the project would include capacity to make sulfonate detergents and dispersants. The company expects these to be among its mostly highly demanded components going forward and that the additional capacity will allow it to relieve bottlenecks as it focuses more on sales of additive packages.
Additive packages are combinations of chemical components sold to lubricant manufacturers who blend them with base stocks to make finished products. In addition to materials, additive package suppliers provide the formulary know-how that the blend of chemicals and base stocks that they prescribe will meet certain finished lube performance requirements.
Globally, supply of lube additive packages has been dominated for a couple decades by Lubrizol Corp., Chevron Oronite and Afton Chemical Corp. – all of which are headquartered in the United States – and United Kingdom-based Infineum International Ltd. Richful is one of several Chinese additive companies that have traditionally focused on components but which have tried or are trying to muscle in on the package side of the business, supplying formulations for products such as light- and heavy-duty automotive engine oils.
In its stock exchange filing Richful said current conditions are making opportunities for companies based in China to make headway in the supply of lube additive packages. Because of supply chain disruptions caused by the COVID-19 pandemic and the ongoing trade war between China and the United States, there is increased desire among industry in China to replace materials procured from foreign suppliers with domestic alternatives, it said.
To take advantage, it said, domestic companies need to quickly scale up, improve their competitiveness and provide superior customer service.
The new Xinxiang project still requires approval of Richful’s stockholders. The company estimated that the project would cost ¥100 million and said it would be paid for through a combination of leftover proceeds from its 2020 initial public stock offering and operational revenues. It estimated that construction would last for 24 months.