After decades of duopoly, China's oil majors are losing market share, meaning lower prices for lubes blenders.
According to Lube Report's Tim Sullivan, a consensus appears to have emerged at the recent CBI China Base Oil Summit 2013. The trend shows China's base oil market has become more favourable for lubricant blenders over the past decade, as increasing competition has been driving the price of base oil down, although pricing in general appears to be an inaccurate science, adding to volatility of China's oil market.
Conference delegates heard that, in 2001, PetroChina and Sinopec were responsible for over 80% of China's base oil suply, compared to just 44% by 2012, with maket share being eclipsed by the likes of CNOOC and other smaller domestic producers, while supply of base oils has increased from outside the country, thus driving down margins.
A long-term buyers market will be good news for lubricants blenders, and indeed consumers, in China for years to come, particulalry with predictions of a doubling of the lubes market by 2020.