China Base Oil Output Tanked in 2022


China will produce a quarter less base oil this year than it did in 2021, according to estimates by Longzhong Information Group. Output dropped particularly low during the second half of the year when drastic COVID-19 lockdowns caused the country’s economy to contract.

Longzhong, a market data research firm in the city of Zibo, said this month that the country’s base oil production should finish this year at 7.45 million metric tons, including white oils, 25% less than in 2021, according to an article published by China Lubricant Information Network.

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Operations of many type of businesses were disrupted during the second half of the year, and the economy broadly sagged as the government imposed strict lockdowns in a number of China’s biggest cities. Oil refinery operating rates, which were already low, dropped further.

Monthly base oil production had topped 60,000 tons in seven of the first eight months of the year and was above 70,000 tons in both February and March, Longzhong reported. But output sank below 60,000 in each of the last four months, bottoming out at approximately 48,000 tons in December.

China’s base oil capacity has surged the past 15 years to 14 million t/y, according to Lubes’n’Greases’ Base Stock Plant Data, giving it the largest base oil supply base, ahead of the United States’ 13 million t/y.

China’s base oil supply base is a mismatch, however, for its lubricants industry, which is one of the world’s two largest lube markets, along with the U.S. China has an enormous surplus of capacity to make API Group II oils but is short to meet its Group III requirements, which are growing as the quality of finished lubricants it consumes is rising.

Even before the coronavirus lockdowns, domestic Group II producers were challenged to place their products, a situation exacerbated by the fact that base oil exports from China have historically been nearly nil.