Imported base oils will play a more and more important role in meeting Chinas surging demand for lubricants, Jinyuan Kong, senior engineer and vice director with the PetroChina Planning & Engineering Institute, told the ICIS Middle Eastern Base Oils & Lubricants Conference here last month.
Citing global data from Fuchs, Kong said thatworld lubricant demand, excluding marine oils, in 2009 shriveled to just 32 million tons, a volume similar to that of 1970. But in China, PetroChina saw domestic consumption rise more than 6 percent from 2008 to top 6 million tons in 2009. And in the first three quarters of this year, consumption is nearly 5 million tons, she continued. It may reach 6.5 million tons this year.
Demand for engine oils is the key driver of lubricant growth. China is becoming the country of the car, said Kong, with double-digit growth in vehicle ownership. In the first nine months of 2010, Chinese vehicle sales reached 13 million, or 35 percent year-over-year growth.
Finished lubricant market share has been relatively stable in China. PetroChina is the market leader with 26 percent, followed by Sinopec with 21 percent. Multinational companies together hold 30 percent of the market; local blenders have 17 percent; recycled oils make up 4 percent; and imports have 2 percent.
Turning to base oils, Kong noted that China consumes more naphthenics than other regions because of its huge and growing tire and shoe industries, and because of its good naphthenic crude supplies. Sixty six percent of the countrys base oil consumption is so-called API Group I – much is not up to Group I standards, Kong continued, 19 percent is naphthenics and 15 percent is Groups II and III.
The quantity of imported base oils rose from 450,000 tons in 2000 to 1.88 million tons in 2009, showing average yearly growth over 17 percent, Kong noted. Principal sources are Singapore, Korea and Japan. Oils from Russia and Uzbekistan increased in 2009, and will be more in 2010, she continued, because they are always cheaper than other imports.
The average price of all imported base oils in 2009 was $712 per ton, but prices differed significantly depending on quality and source. Japans prices averaged $793/t, while Russias averaged $602 and Uzbekistans averaged just $365, Kong said.
Some new domestic base oil capacity is anticipated, Kong continued. Sinopecs 450,000 t/y Yanshan Group II/III plant, expected to stream in 2011, has experienced delays. But CNOOCs 400,000 t/y Huizhou Group II/III plant and PetroChinas 300,000 t/y Dalian Group II/III plant are expected to stream in 2011 and 2012 respectively.
This new domestic capacity, however, will not meet demand. Kong updated the supply/demand outlook that she had offered earlier this year, concluding that Chinese base oil consumption will reach 8.3 million tons by 2015, raising the gap between demand and domestic supply to 2.71 million tons.
|
China Base Oil Supply/Demand Outlook, 2009-2015 (in millions of metric tons) |
|||
|
|
2009 |
2010 |
2015 |
| Finished lube demand |
6.0 |
6.5 |
8.3 |
| Base oil consumption |
5.5 |
5.94 |
7.56 |
| Base oil supply: | |||
| PetroChina |
1.6 |
2.1 |
2.5 |
| Sinopec |
1.3 |
1.3 |
1.65 |
| CNOOC |
0.3 |
0.3 |
0.7 |
| Total base oil supply |
3.2 |
3.7 |
4.85 |
| Gap |
2.3 |
2.24 |
2.71 |
Source: Jinyuan Kong, PetroChina, Oct. 2010, Dubai
This gap, Kong concluded, will be met by imported oils and local refineries. Imported oils continue to be a necessary supplement. The volume of imported base oils is expected to reach nearly 2 million tons in 2010, and 2.2 million tons in 2011.