Chinese JV Blends for Distributors

Acorn Oil and Linxian Petrochemical opened a joint venture lubricant blending plant in Tianjin, China, last month. The facility focuses on providing toll blending services mainly for lube distributors that wish to market their own brands of automotive and industrial lubes.

The plant cost 2.5 billion (U.S. $375.8 million) and has capacity to produce 200,000 metric tons per year of lubricants and vehicle maintenance fluids. The joint venture operates as Acorn-Linxian.

Photo: Acorn-Linxian

Base oil tank farm at Acorn-Linxian's new blend plant in Tianjin, China

Most of these distributors [that are the joint ventures customers] have long been working with big brands like Shell and Mobil, so they have solid experiences and have built extensive sales networks to develop private lube brands, Acorn-Linxian General Manager Huang Fuxiang told Lube Report Asia. He added that building a blending facility is costly, so some distributors prefer to partner with a plant operator qualified to handle manufacturing.

To ensure sufficient supply of raw materials, the facility has a base oil tank farm with storage capacity of 70,000 tons. Some of the base oils are sold by Linxian.

Linxian is a lubricant marketer and a base stock trader, while Acorn Oil is a lube producer under Acorn International Inc., a Chinese company best known for direct sales of consumer products such as backpacks. For the Acorn-Linxian partnership, Acorn is responsible for sales and marketing, and Linxian for research, manufacturing and daily operations.