ZHENGZHOU, China - The United States-China trade war presents an opportunity for Chinese white oil suppliers to grab market share in their domestic market, gaining ground on importers from the U.S. and elsewhere, according to attendees at a conference here last week. They added that Chinese companies can leverage long-term advantage by improving the quality of their products.
The trade war showed clearly that the U.S. will never stop suppressing Chinas rise. So we oil producers must take action to ensure high quality oil supply in case imported oil supply is interrupted, Qingyuan Group Chairman Ma Zhiqing said Nov. 20 at Enmores China International White Oil Market and Applications Summit.
Qingyuan is a private refiner based in Zibo, Shandong province and claims to be Chinas largest base oil and white oil supplier, with throughput capacity to refine 8.2 million tons of crude oil. The company also claims to supply more than 100 categories of specialty oils.
Our goal is to compete against foreign-branded oils in every field, including base oil, white oil and metalworking fluids, Ma said.
Qing Yuans ambition is shared by Yitai Ningneng Fine Chemical Engineering , a two-year-old Inner Mongolia-based company producing light white oils, liquid paraffin and isoparaffin, which is often used to produce white oils. The feed that the company uses is 1.2 million tons per year of coal-based liquid paraffin from its state-backed partner Yitai Group.
YN vice president Zhao Jun said Chinas demand for isoparaffin has largely been suppressed over the years due to the lack of stable local supply.
Foreign supply is [also] unstable, so together they caused ridiculously high prices for isoparaffin and scared away Chinese buyers, he said.
He said China uses 50,000 tons of isoparaffin a year, the same as Japan, despite the huge difference in population. And among the 50,000 tons, around 40,000 tons are imported into China.
It means two things, Zhao said. One is that China is a market with great potential for isoparaffin growth. The other is, Chinese high quality isoparaffin suppliers like us are able to replace foreign suppliers.
He predicted Chinas demand for isoparaffin, which is considered to be of low level toxicity, will grow to 120,000 t/y as the country continues to bolster environmental laws on matters such as volatile organic compounds emission from paints and occupational hazards.
Also, he was confident that in a year, YNs supply of highly refined, coal-based isoparaffin will edge out about 50 percent of imported isoparaffin. He claims YN has the capacity to supply 170,000 tons per year of isoparaffin.
But replacing imported white oils is not easy, Zhu Binbin, vice director at China National Petroleum and Chemical Planning Institute, cautioned. He pointed out that one of the big problems is that Chinese suppliers do not interact with clients.
As a supplier you really need to know your client market, know what your client is developing and develop an exclusive white oil solution for him. This is the way to make your own brand and compete with others. Right now I dont see it happening in China, he said.