China’s Bohui Nixes Group II Plant

Chinese fuel supplier Bohui canceled plans to build an API Group II base oil plant but has built a facility that produces paraffin wax, according to a company prospectus. The company was recently approved to go public on the ChiNext startup board of the Shenzhen Stock Exchange.

Originally, Bohui planned to build an 800,000 t/y API Group II facility. “We decided not to go with Group II oils because [treated distillate aromatic extracts] is more related to our development strategy,” Bohui General Manager Wang Lv told Lube Report.

He said that as the company continues to supply highly processed fuel, it will also aim to expand its product varieties using hydro-treated rubber processing oils. These products may include rubber products and food additives.

The Ningbo, Zhejiang province-based company aims to raise ¥423 million ($59.6 million) through its IPO on June 17, according to the company prospectus. About ¥300 million will go to a 600,000 t/y facility for treated distillate aromatic extracts, or so-called green rubber process oil, and a 200,000 t/y facility that produces paraffin wax.

The TDAE facility started operation in April, and the paraffin wax facility is undergoing testing. The two facilities use Shell’s hydro-dewaxing technology.

Bohui mainly serves industries such as tire, marine fuel and bitumen. While the company is confident that its business for marine fuel and bitumen industries will continue to grow, it is not as sure about the business with the tire makers as the auto industry was hit hard by the Covid-19 pandemic, according to the prospectus.

China in May experienced the first growth in the past 11 months in combined sales volume of passenger cars, SUVs and minivans, to 1.6 million, up 1.8 percent year on year, according to China’s passenger car association. However, such growth was largely attributed to SUVs, which experienced a 13.7 percent year-on-year jump, compared with 4.8 percent and 22.4 percent year-on-year drops for passenger cars and minivans.

Other risks that Bohui faces include tension between the United States and China and a weak global economy due to the pandemic, according to the prospectus.