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Rule is relaxed and China's export still lags behind
Class:Supply and demand information Date:2024/9/4 8:57:40
Known as the "world factory," China views exports as the main driver of economic growth. In most industries, export opportunities have been widely sought after as a way to increase sales and sometimes to make up for overproduction.
But the lubricant industry is an exception. Exports of lubricants, greases and base oils have been under strict control over the years and until January of this year the national government lifted the requirement that suppliers would need to go through one of three state-owned enterprises to sell abroad.
However, an export license is still needed, but the change marks the government's intention to provide exports for the problem of overcapacity in lubricants. According to government statistics, the annual domestic production of lubricants reached 5.7 million tons in 2015. Domestic demand is estimated at 5 to 6 million tons / year, but the country imports millions of tons of finished lubricant each year.
So far, policy changes have not had much impact. According to customs data, China exported 6,045 tons of lubricants in April, while exports in March and February were 9,951 tons and 5,110 tons respectively.
In the Lube Report Asia interview, many industry insiders said they are not much interested in exports because they believe that foreign consumers, especially those in the western market, are often more experienced in purchasing lubricants, China's lubricants are not competitive in quality.
Other issues include the political and economic instability in the region where the business is positioned and the difficulty in finding trusted and capable distributors. Chinese suppliers said that the domestic market is big enough, why do you have to venture out?
Seang Chhay, sales manager at Bascarito Development, a lubricant distributor in Phnom Penh, Cambodia, said the concern was reasonable.
He told reporters: "Cambodia's economic development has been slow so this year that people are reluctant to spend, which means fewer people buy a new car." "It affects the sales of oil." Chhay sells a wide range of products to Cambodian consumers, Oil supplied by companies and Thai companies.
Chhay said: "The rich, who like to buy expensive new cars, tend to choose multinational brands, while those with a lower income usually have used cars, and they like to buy cheap lubricants, such as those from Thailand."
He admitted that there are a handful of lubricants made in China on the market. He said: "We think lubricants are to some extent Western products, not China, and China is not known for producing lubricants in Cambodia."
Although Chhay himself is not opposed to working with China National Lubricants, he said he is not a good time to import more lubricants this year because of the downturn.
He said: "Some local distributors of lubricants have closed their businesses and my business is struggling, but I hope the economy will pick up next year and the lubricant market will once again be better."
However, some Chinese lubricant suppliers see exports as a long-term growth opportunity. One of them is Donghao Oil, headquartered in Shanghai, which sells oil in Sweden and is very much for the Chinese oil company that has been intimidated by the high standards in the developed markets It is surprising.
DongHao Oil Group exports passenger car engine oil to Sweden, one of the few Chinese lubricant suppliers that sells its products in Europe.
Right now, exports account for only about 1% of Donghao's oil revenues, but with the Swedish market's success, the company's goal is to sell its lubricants to more countries.
Sun Weimin said that orders from South America and Central Asia have been rolling in, but in very small quantities. In addition, Tung Hwa Oil is negotiating with some distributors in the United States, but the attractive and challenging U.S. market adds: "We may need to spend a lot of time and patience to enter."
"We want to establish a reputation in the global market," said Sun Weimin, "The export of industrial lubricants has limited our brand because lubricants are pre-installed on machines shipped to countries outside of China."
Although Sun Weimin admitted that under normal circumstances, China's oil companies may face many challenges in the global market, but he said quality is the least he needs to worry about.
He said: "In recent years, the fierce competition in the Chinese market has greatly improved the quality of lubricants in China. As far as I know, the quality of lubricants in China has reached the average level of the global market."
Sun Weimin (transliteration) said, however, the downside is that China's oil prices.
Various taxes and fees such as consumption tax and value added tax levied in the supply chain pushed up prices. Mobil lubricants, for example. In the United States, the price of a 5W30 fully synthetic engine oil is $ 6.59 for 946 ml, but the same product costs about $ 18.1 in China.
Sun Weimin said: "If China is determined to encourage lubricants export business, then the government should indeed introduce some supportive tax policies."
Hainan-based refinery Hainan Handi Sunshine Petrochemical sells second-class base oils to South America, Indonesia and Vietnam, according to sources at the company, and high oil prices also allow base oil exporters to avoid And far.
She said the company needs to invest more than ¥ 1,700 (about $ 258.7) per tonne of base oil for consumption-only taxes.
She said: "If you do not launch the tax rebate plan, few Chinese base oil refineries can benefit from export opportunities." She added that Hainan Han Sunshine Petrochemical Co., Ltd. is granted a full refund of the right to a very small number China one of the base oil refinery.
"This is one of the very few private Chinese refineries that sell base oil outside of China," she said.
