Group II base oils to rise with lubes demand in China

ExxonMobil sees modest growth for the region with a shift towards higher quality base oils

Move towards high quality oils

Moving towards high quality oils Image: Renkert

With major economies like China adjusting to slower growth rates, regional lubes markets are now likely to feel the effects, meaning demand may soften across Asia in the coming years.

In a recent interview with ICIS, ExxonMobil’s global-base stocks and specialties planning manager, XB Cox, predicts that: “While Asia Pacific continues to be the growth market of the world, the pace of growth has slowed…so our expectation is that lubricant demand will grow modestly in the coming years, but with a shift towards higher performing lubricants.”

The ExxonMobil manager also expects to see higher-quality Group II base oils replacing lower-quality Group I oils as companies attempt to lower sulphur content and improve performance.

The US major has already added 400,000 tons a year to its Group II base oil capacity in the region through its Singapore base stock refinery, and is on track to build another Group II refinery in Rotterdam by 2018.

Despite the shift towards high quality lubes, products improvements will still be slowed by “long vehicle turnover times, limitations in fuel qualities, and buying behaviours among consumers who still value cost over performance”, predicts Cox.

According to consulting firm Kline & Co, around 25% of new global base oil capacity will come from the Asia Pacfic region.