ExxonMobil announced last week the completion of an expansion at its lubricants blending facility in Taicang, China, a response to long-term growth that the company foresees in the countrys lubricant market.
The expansion of this facility will allow ExxonMobil to provide its Mobil lubricants to automotive, industrial and marine applications in China, Ashley Alemayehu, media relations manager for the company, told Lube Report Asia. According to ExxonMobils 2016 Energy Outlook, Chinas demand of energy for transportation is expected to rise by about 80 percent by 2040.
Chinas expanding middle class means more people can afford cars. ExxonMobil expects Chinas passenger car fleet to grow 250 percent to more than 400 million by 2040, she added.
ExxonMobil is also projecting growth in demand for Mobil lubricants for commercial vehicles and industrial sectors. Recently, it launched Mobil Delvac motor oil for light-duty diesel engines, to meet changing needs in Chinas trucking industry.
The Taicang plants expansion makes it one of the largest in ExxonMobils global finished lubricants manufacturing network. The company also expanded its lubricants plant in Tianjin, China, two years ago.
The multi-million dollar expansion of the Tianjin lubricant plant, completed in 2014, increased the plants capacity by nearly 80 percent, enhancing its capability to supply a wide range of lubricants for automotive and industrial applications, said Alemayehu.
ExxonMobil declined to disclose the production capacity of the Taicang plant, but Stephen B. Ames of United States-based SBA Consulting, estimated that the facility can now make around 150,000 metric tons per year of lubricants prior to the expansion. Ames has inferred that the plant opened with capacity of approximately 40,000 t/y in 1997 and subsequently underwent a couple of expansions.
Ames speculated that output from the Taicang plant will be restricted by the type of base stocks delivered there. One thing that ExxonMobil does is use [its] Singapore blend plant to send products into various parts of China, such as synthetics, Ames explained, adding that ExxonMobil only brings API Group I and II base oils to the facility.
Even though lubricant demand in China has been flat in recent years - due to a slowdown in economic growth - market conditions for lubricant products are still favorable for companies like ExxonMobil, said Ames.
China has transitioned quite a bit away from a manufacturing economy more towards a service aspect economy. A lot of the weakness in China is that their industrial output has slowed, but the demand for service-type elements has increased accordingly, and thats why [Chinas economy] is growing at roughly 6.5 percent per year, he said.
Ames believes that the Taicang blend plant expansion could be driven by ExxonMobils plan to supply high-tier lubricant products in China, particularly automotive engine oils, through supply agreements with automakers.
Most [OEMs] are using what they call global platforms: The drivetrain of the cars they are building in China [is the same] as the comparable model would be in their Western or Japanese plants, so they need the same types of lubricants, said Ames. Since most of those OEMs outside of China are tied up with the major international oil companies, then they also would like to have that same type of supplier in China.