Chinas Group I output slipped about 2 percent to 2 million tons in 2010. The decline came as PetroChina shifted focus to the lubricant market and closed down overcapacities in subsidiary refineries, like in Yumen Oilfield Refinery and Jinxi Petrochemical, Shi said.
Off-spec base oil output grew by 21.3 percent from 2009 to 2.1 million tons last year. Shi noted that domestic traders blended off-spec and naphthenic base oils into standard base oils more frequently in 2010.
Base Oil Imports
China was dependent on imports for meeting 27 percent of its base oil demand in 2010, Shi said. About 51.7 percent of imported base oil is Group I, 36.8 percent is Group II and more than 9 percent is Group III.
She said the base oil import market has become more brisk due to a variety of factors. From Singapore and from Taiwan, China keeps seeing more imported products, Shi added.
She noted that some clients are with companies affiliated with Sinopec and PetroChina. These clients said last year they could not really buy base oil from Sinopec or PetroChina, so they have a strong interest to import base oil from other countries, she said, noting that the two companies released less than 300,000 tons of base oils to the commercial market last year.
China imported approximately 2.1 million tons of base oil during 2010, according to C1 Energy. Singapore (32 percent), South Korea (24 percent) and Japan (13 percent) topped Chinas base oil import list during 2010, Shi said.
Just behind was Taiwan at 11.9 percent, supplying 250,000 metric tons in 2010, an increase from 3.2 percent in 2009. Shi noted that from 2011, the tariff on Taiwanese base oil imported into mainland China drops to 5 percent from the previous 6 percent. That tariff will decrease to zero percent in 2012. China also imported base oil from Russia (9 percent); the United States, Malysia and Thailand (2 percent each); Indonesia and Uzbekistan (each 1 percent), with others accounting for 2 percent.
Chinas naphthenic base oil output totaled 1.15 million metric tons in 2010, Shi said, up 24 percent from the nations 2009 total. PetroChina Karamay Petrochemical is Chinas largest naphthenic base oil producer, yielding 61 percent of Chinas total, Shi said. Other naphthenic producers in China in 2010 included Liache Petchem (13 percent), Panjin Northern Asphalt (13 percent), China Offshore Bitumen (9 percent) and Jinmen Petchem (4 percent).
Naphthenic imports into China totaled 50,000 metric tons in 2010, up 72 percent from 2009, according to Shi. Nynas dominated the import market with a 74 percent share, followed by Ergon at 20 percent and Idemitsu Kosan with 6 percent. Total naphthenic consumption in China reached nearly 1.2 million tons in 2010. The largest demand came from lubricant blending plants, Shi said. Most private lubricant plants use rubber processing oils in lubricant blending for lower feedstock costs. According to the presentation, the demand breakdown included 63 percent from lubricant blending plants and 16 percent for transformer oils.