According to data provided by CNPC on November 25, 2010, although global lubricants demand declined in 2009, China’s consumption still rose to more than 6 million tons, and is expected to increase to 6.5 million tons in 2010. Bigger China's desire to import base oil .
Imported base oil will play an increasingly important role in meeting China's growing demand for lubricants .
Global data provided by Flowserve shows that the demand for lubricants excluding marine oil declined to just 32 million tons in 2009, similar to the 1970s. However, China’s consumption increased by more than 6% from 2008 to 6 million tons in 2009. In the first three quarters of 2010, consumption reached nearly 6.5 million tons.
The demand for engine oil is a key driving force for the growth of lubricants, and China is becoming a major automobile country. The number of autos has grown at a double-digit rate. In the first nine months of 2010, China's auto sales reached 13 million, an increase of 35% year-on-year.
China’s market share of finished lubricants is relatively stable. CNPC is the market leader, accounting for 26%, followed by Sinopec for 21%. Multinational companies together accounted for 30% of the market, local blenders accounted for 17%, waste oil recovery accounted for 4%, and imports accounted for 2%.
In terms of base oil, China consumes more naphthenic oil than other regions because of the large and growing tires and footwear industry, and because China has a better naphthenic crude oil supply. Sixty-six percent of China's base oil consumption is in the category I category, and most of them are not higher than the category I oil standard. 19% are naphthenic oils and 15% are II and III oils.
Base oil supply comes from PetroChina and Sinopec, and supply remained stable in the last 10 years at approximately 3 million tons/year.
The amount of imported base oil has increased from 450,000 tons in 2000 to 1.88 million tons in 2009, with an average annual growth rate of more than 17%. The main sources come from Singapore, South Korea and Japan. In 2009, base oils from Russia and Uzbekistan increased, and more in 2010, because they are cheaper than other imports.
In 2009, the average price of all imported base oil was US$712/ton, but depending on the quality and source, the prices were very different. The average price from Japan is 793 US dollars / ton, while the average price from Russia is 602 US dollars / ton, the average price from Uzbekistan is 365 US dollars / ton.
It is expected that there will be some new domestic oil capacity. Sinopec Yanshan Branch's 450,000 tons/year II/III oil plant will be put into operation in 2011. The CNOOC Huizhou 400,000 tons/year II/III oil plant and CNPC Dalian 300,000 tons/year II/III oil plant will be put into operation in 2011 and 2012, respectively.
However, these new capabilities will still not meet the demand. PetroChina has raised its supply and demand forecasts in early 2010 and believes that China’s base oil consumption will reach 8.3 million tons in 2015, widening the gap between demand and domestic supply to 2.71 million. Tons, see Table 1 China's supply and demand forecasts for base oils for 2009~2015.
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