We have seen a significant shift, especially among independent lube manufacturers. In fact, you have independents that can flip between Group I and II depending on what the prices and the availability are, Classen said.

Independents in the country are also trying to distinguish themselves from parts of Africa where price is a bigger concern. Nowadays, independents are more focused on their brand and their quality. In fact, quality rather than price is becoming the differentiating factor in the South African market, he said.

While Group I prevails, demand for Group II base stocks is growing. However, companies such as Orbichem are now only bringing in Group I in smaller flexitanks instead of bulk shipments. Typical volumes were 2,000 to 3,000 metric tons per year but now this has fallen to 300 to 500 tons, Classen said. Group II imports, by contrast, range between 2,000 and 3,000 tons.

Currently, Chevron is the main importer of Group II in South Africa, but the market will accelerate when other major oil companies start supplying Group II, Classen expects. The share of Group II in South Africa could be as high as 30 percent. Meanwhile, the other majors are still using Group I base oils from the South African-based Sapref refinery.

Patrick Swan, principal consultant at Aswan Consulting and former president of the South African Institute of Tribology, said that even though independents are using Group II, I would not say there is a major push from independent manufacturers to use Group II in South Africa.

Classen agreed that there will always be a need for Group I lubricants. Group II does not provide the solvency or high viscosity that Group I can give you. So Group I is never going to disappear completely.

Group I may eventually become a specialty, like polyalphaolefins, he said. The day is going to come when only a few refineries will produce Group I around the world. Group I is moving into that phase where people will be ready to pay a premium for it, he said.

Classen also noted that there is also a move toward Group III lubricants in the South African market. Even the Independents are adding some synthetic automotive lubricants to their product range because of the easy access to Group II and Group III base oils.

Mervin Naidu, sales manager for Unichem South Africa, noted that synthetics are also beginning to gain traction in the industrial segment. We get a lot of inquiries from lubricant blenders on the industrial side of things, he said.

Classen does not think that there will be a return to Group I and that the only challenge South Africa may face in transitioning to Group II is logistical due to a lack of storage capacity. If the majors start converting their tankers currently handling Group I, we should be able to survive without having any base oil production.