Southwest Dingsheng Energy plans to build a base oil rerefinery in Xi Feng County, Guizhou province. A local government environmental assessment was recently completed for the 60,000 metric tons per year API Group I plant, which will cost about ¥159.8 million (U.S. $22.6 million).
The company will collect feedstock, including used engine oils, transmission oils and biodegradable gear oils, along with its suppliers in and around Guizhou province. The main product will be solvent neutral 150 and SN250 base oils.
“We hope to see the construction happen this year, as it was planned,” Shi Hong, a project manager at Dingsheng, a subsidiary of the state-owned Guizhou New Energy, told Lube Report. “But the pandemic added a lot of uncertainties to the plan.”
For example, the company must find new vendors to replace the ones that closed their businesses during the Covid-19 pandemic.
“So, even though many of our suppliers and vendors have resumed work to some extent, the collaborations have not been smooth,” Shi said.
The coronavirus has wreaked havoc on China’s manufacturing industry. Demand for many major manufactured products is declining. Passenger car and commercial vehicle demand is estimated to shrink by 9 percent and 0.5 percent in 2020. For clothing and apparel, demand is likely to drop 8 percent year over year, according to a recent report by the consulting firm ICIS.
The challenging market situation might also cause changes to the plan, Shi said.
“Our decision makers are watching demand changes closely to decide if the capacity should be adjusted,” he said.