Newly announced rules changes by Chinas Ministry of Commerce will make it easier for domestic companies to export finished lubricants, greases and base stocks.
Until now, companies wanting to export these products had to go through one of three state-owned trading companies: Sinochem Group; Unipec, a subsidiary of Sinopec; or China National United Oil, which belongs to PetroChina. As a result, the worlds largest exporting nation exported very low volumes of lubricants.
Photo: Jiangsu Lopal Tech
Chinese lubricants, like these engine oils from Jiangsu Lopal Tech, may soon be offered in foreign markets thanks to relaxed export rules.
The Chinese government uses export licenses to control the export of products such as oil products, rare earth metals and citric acid that are in great demand in the domestic market. Export licenses have been required for lubricants, greases and base oils since 2008, when a quota system was lifted for the three products.
But lubricants, greases and base stocks still had to go through the three state trading companies, which favored big Chinese brands such as PetroChinas Kunlun Sinopecs Great Wall, leaving few opportunities for small Chinese brands.
Loosening the reins on exports is a government strategy to help ease the pressure of a domestic market oversupplied by base oils and lubes, according to Zhi Yan Consulting. The Beijing-based firm said such pressures will become normal, thanks in part to rapid growth of domestic refining capacity.