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April 26, 2019

Volume 7 Issue 7

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Asia-Pacific Consumes Most of World’s Base Oil

Suzhou, CHINA – The Asia-Pacific region now accounts for more than half of global base oil demand, an ICIS representative told an industry conference here last week.

Addressing the Enmore China Lubricants Market Focus on April 17, ICIS Information Manager Shi Yinzhi said base oil demand in Asia-Pacific, not including the Middle East, rose more than 5 million metric tons per year in the past decade, while combined demand in North America and Europe decreased by more than 6 million t/y.

“Growth in Asian and developing economies barely compensated for loss of demand in mature markets,” Shi said. ICIS estimates that Asia-Pacific, not including the Middle East, now accounts for just about half of global base oil demand, which the information firm pegged at approximately 37 million t/y.

Shi also reported that China’s reliance on base oil imports eased due to a decline in the nation’s finished lubricant demand in 2018.

Lubricant demand in China had grown significantly in the early part of the past decade, helping to spur a large shift in global base oil consumption toward Asia-Pacific. No other region came close to matching its jump in base oil demand. South America’s demand increased around 1 million t/y, Shi said, while the combined demand of the Middle East and Africa swelled a few hundred-thousand t/y. North America’s consumption fell more than 2 million t/y, while demand in Europe – including the former Soviet Union – slid more than 4 million t/y.

Lubricant and base oil consumption in South and Southeast Asia are still rising, but the Chinese market was essentially the same size last year as it was in 2014 – roughly 8 million tons, according to ICIS calculations. The nation’s demand for base oil fell 4.2 percent from 2017 to 2018, thanks to declining demand for automotive and industrial lubricants.

CNOOC's Taizhou base oil plant

Photo courtesy of CNOOC

China National Offshore Oil Corp.'s base oil plant in Taizhou, China, produces API Group II and naphthenic base oils. The Asia-Pacific region now accounts for more than half of global base oil demand.

“Downstream lubricants manufacturers experienced a year-on-year decline in industrial manufacturing performance and a decrease in [consumption] of base oils,” Shi said. “Due to the decline in automobile sales, downstream demand for automotive lubricants experienced negative growth.” China has been one of the world’s largest base oil importers, but imports fell 8 percent to 2.6 million tons last year, according to Shi. South Korea is the largest source, accounting for 38 percent of that volume, followed by Singapore at 24 percent, Taiwan at 14 percent and Japan and Qatar at 5 percent each.