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August 22, 2017

Volume 7 Issue 8

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Northern Asphalt Launches Lube Biz

Panjin Northern Asphalt Co., a Chinese government enterprise that makes petroleum asphalt and naphthenic and API Group II base oils, is pushing its way into the country’s crowded finished lubricants market. 

Its line of lubes, branded Zhong Bing Zhi Xing, or “the star of Chinese soldiers,” is already being toll-blended and sold to original equipment manufacturers through factory-fill contracts. The Panjin, Liaoning province-based company expects to have constructed its own lubricants blending plant at its headquarters by the end of the year. 

Lubricants will help Panjin Northern Asphalt offer a more inclusive portfolio to its business-to-business clients, said Cui Jianjun, a project manager for the firm. Lube Report Asia arranged an exclusive interview with Cui last week in Xi’an, Shaanxi, on the sidelines of consultancy Muchengyou’s Lube Industry Branding and Marketing Forum. 

He said the lube facility, which costs over ¥100 million (approximately U.S. $15 million), will include a testing lab. “The lab is fully equipped with oil testing devices using American standards,” Cui said. “We hope it will help lube producers who are offering products to foreign OEMs.” Third-party lube testing services exist in China, but are mostly only available from a small number of multinationals firms, such as TÜV SÜD and SGS. 

Although the company will be new to the motor oil sector, Cui is confident that it will be able to guarantee the quality of its finished products and keep feedstock costs minimal by using its own supply of base oils. 

Most of the company’s lube feedstock will come from its new, 300,000 metric tons per year naphthenic base oil facility that will use catalyst technology licensed by Shell. Over ¥800 million was invested in the refinery, which will embark on a test run in September. 

The new production capacity will expand Panjin Northern Asphalt’s existing, 200,000 t/y naphthenics facility in Panjin, which produces lower-quality lubes than the new unit will, and is therefore mostly used to supply clients making rubber processing oils and transformer oils. 

The company also operates a 400,000 t/y Group II refinery in Panjin. 

Even with high-quality base oils, Cui acknowledged that there are challenges in China’s highly competitive motor oil market, such as the fact that it is already teeming with thousands of brands.  

“We realized motor oils require a completely different distribution network than asphalt and base oils, and that’s a challenge for us as well,” he concluded. “We will have to find the right people to lead our sales team.”