The volume of lubricant additives imported into Russia fell more than 70% in March, following the country’s invasion of Ukraine, but rebounded to a 5% year-on-year increase in June, when China accounted for 95% of additives imports, according to a market research firm.
The Russian lubricant market has struggled with chemical additive supply since Western companies withdrew from the market following the Ukraine invasion. Infineum, Chevron Oronite, Lubrizol and Afton Chemical supply most of the world’s lubricant additive packages, especially for finished lubes meeting the latest industry and original equipment manufacturer performance standards. Without access to the lubricant additive packages of those companies, Russian lube marketers have reportedly turned to sources in countries such as China.
Substitute suppliers generally have few if any packages that meet the latest standards, although at least one Chinese company supplies packages meeting recent API specs.
“Currently, the Chinese additive producers can fill the void for additives needed in some passenger car and heavy-duty motor oil and in some marine oils,” B2X said in a bulletin on its Telegram channel.
Russian imports of lube additives started the year at a healthy clip of around 4,900 tons in January, B2X said, based on customs data. After Russia invaded Ukraine in late February, March imports dipped to around 2,000 tons, 73% less than the same month of 2021. After that, imports began to recover on the basis of year-to-year comparison, B2X reported in its monthly bulletin on its Telegram channel. The total in May was still around 2,000 tons, but that was only 59% less than May of last year.
“Lubricant additives were not part of the first wave of the [government sponsored] import substitution program from 2014 to 2016,” the firm said, referring to a Russian policy of encouraging domestic development of products that can replace foreign imports. “This put the industry in a bind with the expected risks in 2022,” B2X commented in the report.”
In July, Russian lube additive imports reached about 5,100 tons. While nearly all of that volume came from China, most of January’s imports had come from the Netherlands, Belgium, France, Italy and Germany.
“Surely, imports have resumed,” B2X said. “However, the vertically integrated oil companies [big Russian oil majors] and independent blenders are facing severe deficits that got much worse with the withdrawal of the foreign brands.” Russia imported around 59,000 tons and 54,000 tons of lube additives in 2020 and 2019, respectively. These volumes exclude additives made by the Belarusian producer AddiTech, formerly known as LLK-Naftan.
The Russian lubricant marketers are hurt most by a shortage of antioxidant and antiwear additives, as well as viscosity modifiers, B2X surmised. The market also has a critical shortage of additive packages for industrial lubes.
B2X also said that the “parallel import is insignificant” when it comes to lube additives. Under the program, the government occasionally updates a list of sanctioned products that may be imported and sold within the country without regard for trademark and copyright protections.