Analysis of the Current Status and Development Prospects of China’s Lubricant Industry
Release time:
2021-08-30
Author:
Goncord Oil
The lubricants industry is a vital component of the petrochemical sector, serving diverse sectors of the national economy—particularly the industrial economy—and closely tied to overall macroeconomic conditions. As a key indicator of economic health, the ratio of lubricant consumption to GDP in developed economies generally remains at a relatively reasonable level. In contrast, China’s lubricant‑to‑GDP ratio is disproportionately high, with a consumption intensity of 55. This imbalance stems not only from the rapid pace of economic growth but, more significantly, from inefficient and wasteful lubricant use. At present, China’s consumption intensity far exceeds both the global average and that of developed countries.
The lubricants industry is a vital component of the petrochemical sector, serving diverse sectors of the national economy—particularly the industrial economy—and closely tied to overall macroeconomic conditions. As a key indicator of economic health, the ratio of lubricant consumption to GDP in developed economies generally remains at a relatively reasonable level. In contrast, China’s lubricant‑to‑GDP ratio is comparatively imbalanced. With a lubricant consumption intensity of 55, this figure reflects not only the rapid pace of economic growth typical of developing economies but also, more significantly, inefficient and wasteful consumption patterns. At present, China’s consumption intensity far exceeds both the global average and that of developed countries.
As one of the earliest commodity markets to open in China, the domestic lubricant market has been propelled by a rapidly growing economy and automotive sector over the past decade, transforming into a fiercely competitive arena where both domestic and international lubricant companies vie for dominance. Product standardization has become a widespread trend across the industry. At present, China is home to roughly 3,000 lubricant manufacturers, with about 30 foreign‑owned brands, while the remainder are predominantly local or regional players.
With the advancement of environmental protection and the machinery industry, increasingly stringent requirements are being imposed on the quality of lubricant products. Lubricants must exhibit high oxidation stability, superior viscosity‑temperature characteristics, excellent low‑temperature fluidity, as well as outstanding shear stability and anti‑wear performance. Relying solely on adjusting additive formulations to enhance lubricant performance can no longer meet these demands, thereby placing higher standards on the quality of base oils. Conventional mineral‑oil‑based lubricants produced through traditional refining processes are unlikely to achieve further improvements. Moreover, globally available crude oil resources suitable for lubricant production are dwindling, forcing the industry to process lower‑quality heavy crudes—challenges that pose new technical hurdles for conventional refining technologies.
In the future, competition in the lubricants industry will gradually shift away from low‑end price wars and toward a focus on product and brand differentiation. As customer demand evolves toward customization and greater precision, lubricant companies face new challenges in their technical service capabilities. Expanding strategic partnerships with the automotive sector and industrial clients will help lubricant firms further enhance their service offerings and better meet customers’ customized needs.
Lubricating oils typically consist of two main components: base oil and additives. The base oil is the primary constituent, determining the fundamental properties of the lubricant, while additives address and enhance the limitations of the base oil, imparting new performance characteristics; thus, they are an essential part of the formulation. Data show that from 2018 to 2020, China’s base oil production grew steadily. In 2020, national base oil capacity reached 21.3 million tons, with output at 8.75 million tons, and the industry’s overall capacity utilization rate remained stable at 41%.
Meanwhile, on the supply side of base oils, the pace of demand growth has lagged significantly behind that of supply in recent years, resulting in a sustained downward trend in prices under a buyer‑driven market. According to statistics from the China Petroleum and Chemical Industry Federation, during 2020, the market price of Group I base oils in China generally declined, reaching a low of RMB 4,070 per ton at the end of October, before rebounding to RMB 4,910 per ton by the end of December.
The midstream of the industry chain involves lubricant manufacturing. In recent years, driven by China’s rapid economic growth, a steady increase in vehicle ownership, and an accelerating industrialization process, China has become one of the world’s largest consumers of lubricants. In 2020, national lubricant production reached approximately 7.8 million tons, while total tendered procurement amounted to about 46,900 tons.
In terms of imports and exports, according to statistics from the General Administration of Customs of China, from 2015 to 2020, China’s lubricant imports declined overall, while exports increased. In 2020, the country imported a total of 289,500 tonnes of lubricants, a slight decrease compared with 2019, primarily due to the economic slowdown caused by the pandemic. With the pandemic now gradually brought under control, the market is expected to return to normalcy.
This article is excerpted from “China Research Network.”
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