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January 24, 2017

Volume 7 Issue 4

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GS Caltex to Produce Lubes in China

South Korean refiner GS Caltex will invest around U.S. $30 million to build a 210,000 metric tons per year lubricants blending facility in Tianjin, China, scheduled to start operation in 2018.

“We have had some internal discussions about building a facility in China for a while because our production in South Korea can hardly meet the growing demand in China,” Qu Yanjun, sales director at the China operation of GS Caltex, told Lube Report Asia. GS Caltex is a base oil and lubricant joint venture between Korean conglomerate GS Group and U.S. oil giant Chevron. “Many people are wondering how we perceive the future market in China, and I think the investment said enough,” he added.

To date, the Kixx-branded finished lubricants that GS Caltex has been selling in China have all been imported from South Korea, Qu said. While GS Caltex does believe that the setback in China’s economy has affected its lube industry, the company was able to increase its market share in the country last year.

The new facility will produce a full range of automotive and industrial lubricants. Some high performance oils may still be imported initially, Qu added.

Qu added that the Tianjin plant will use API Group II and III base stocks produced at GS Caltex’s base oil plant in Yeosu, South Korea. “We use our own high quality base oils to guarantee the quality,” he said.

In the future, GS Caltex will have a Kixx store online. “We don’t expect big sales from e-commerce, but an online store is part of our branding strategy, and improved brand awareness will also benefit our distributors,” Qu said.

One of GS Caltex’s rivals, Korean refiner SK Lubricants, has also taken its business in China to the next level. In September, SK Innovation, the owner of the refiner SK Energy, entered a strategic partnership with Chinese state-owned refiner Sinopec to expand the former’s refining and lube businesses in China.