There are a couple problems with this story. First, it may not be accurate. Second, it fails to capture whats really significant – the fact that China will soon clearly be the biggest market.

But lets start back with Fuchs calculations. The Mannheim, Germany-based manufacturer estimates that the U.S. consumed 6.1 million metric tons of lubes in 2010, compared to 6.0 tons for China. Fuchs head of global strategic marketing, Apu Gosalia, provided the information during a follow-up conversation about an October speech in which he had said that China passed the U.S. in 2009, 5.5 million tons to 5.4.

There are several reasons that this accounting may not be correct. First of all, as Gosalia himself noted, the estimates for the countries in both years are so close that their order may actually have been reversed. Its known that some analysts had the U.S. still ahead in 2009, and there are probably some that had China in front in 2010. Reliable data about the Chinese market is especially hard to find, so its best to allow for wide margins of error.

But all of this is splitting hairs. The important point is that China has caught up to the size of the U.S. lubricant market. This is a landmark event for the industry whenever it actually happened or happens, for the U.S. has been the largest market for several decades. In recent years it became plain that a change would occur because Chinese demand was growing fast while U.S. demand was flat to falling. But the speed of Chinas ascendance was still remarkable. Just eight years ago the U.S. market was twice as big.

The change atop the rankings means a shift in the industrys focus. Consider all the lubricant and additive companies from around the world that have opened operations in China the past few years. Thats not to say that every company will or should venture into China. Business is about profits, and profits depend as much on margins as volumes. Some of the newcomers to the Chinese market have complained that competition is too steep, margins too thin. To some extent thats to be expected. The biggest market should always have a lot of competition for the very reason that it attracts suppliers from around the world.

But there are also reasons for optimism about prospects for profits in Chinas lube market. One is the trend toward higher quality products, which generally carry wider margins. China has lagged far behind Western standards, but quality levels there are rising fast – much faster than they did in the West. The quality gap should shrink, and as it does margins in China will probably improve.

In addition, there is no denying the opportunity afforded by a big, growing market. If a company can increase sales volumes, it doesnt need as much margin to earn the same profit.

The most significant point about the rise of the Chinese market is that it is not yet complete. Per capita lubricant consumption remains very low compared to developed nations, so there is room for substantial further growth. In a few years it could be quite a bit larger. Its a good bet that the industrys attention will continue shifting east.

Correction – The January/February Last Word included incorrect statements about differences between API Group I and Group II base oils. Group II has a lower sulfur limit and higher saturates threshold, but the categories have the same requirements for viscosity index.