Handi Sunshine Petrochemical has begun commercial production of API Group III base oils at its expanded base oil plant in Hainan province, China.
The company did not state its capacity to make Group III, but it did say that the upgraded output would help reduce China’s production deficit for that category of oil and that it plans to sell some of its Group III into foreign markets.
Located in Yangpu Economic and Development Zone, near the town of Yangpu, Handi’s base oil plant has historically made mostly Group II base oils. The company claimed to add Group III capacity as part of an expansion completed in 2021, and Lubes’n’Greases Base Stock Plant Data has since broken down the capacity as 620,000 metric tons per year of Group II and 80,000 t/y of Group III.
The company’s Jan. 18 news release indicated that its Group III capacity has now been raised significantly.
China has the world’s largest base oil supply base, having passed the United States in recent years after more than a decade of heavy investment. Most of the new capacity was Group II, however, leaving the domestic market with a surplus of that grade and a shortage of Group III. As a result the country imports large amounts of Group III, even after several refiners – including Sinopec, China National Offshore Oil Co., Hengli Petrochemical, Lu’an Group and Qinghe Chemical Technology – added Group III capacity.
Handi’s news release claimed that its Group III is on par with oils supplied by foreign refiners and will compete with them, allowing domestic lubricant producers to reduce their dependence on imports. It said the company also intends to sell export some of its output to foreign markets.
Historically China has exported hardly any base oil. In recent years a few companies have announced plans to start selling internationally, but at least some have not followed through.