China February Base Oil Output Stays Elevated, Keeping Stocks High

China’s base oils output held near a multi-year high in February for a second month, boosting domestic supply and leaving the country better cushioned against feedstock disruptions from the Middle East.

China’s total paraffinic base oils output came to more than 530,000 tonnes in February, down from a near-five-year-high of more than 570,000 tonnes in January but still up 26% year on year, OilChem China data showed.

The February volume was the second highest since December 2021. The dip from January reflected the shorter month rater than any pullback in run rates, with daily output rising to a multi-year high.  

The elevated production in the first two months of the year preceded the Lunar New Year slowdown in blending activity, leaving stocks at healthy levels when consumption resumed.

That buffer now takes on added importance as Middle East supply disruptions threaten to tighten availability across Asia.

Key Highlights

·         Daily base oils output rose to more than 19,000 tonnes in February, climbing from less than 18,500 tonnes in January to the highest since first-half 2021.

·         Daily Group II output rose to more than 16,000 tonnes, the highest since March 2021.

·         Group II base oils’ share of total output climbed to 87% in February, up from typical levels of 82% in 2025 and the highest since end-2021.

·         Asia’s base oils exports to China rose to a 20-month high in January, adding to domestic availability at a time of already-high output.

·         Group III base oils output fell to a 26-month low, resuming a slide in production that began in mid-2025.

Market Repercussions

Increasingly strong Group II base oils margins encouraged refiners to sustain already-elevated output even as demand slowed during the Lunar New Year period.

High output and stock-building left blenders well positioned ahead of the spring oil-change season, when demand typically rises.

The higher stock levels also cushioned the market from the immediate impact of a jump in prices so far in March as crude oil prices surged.

China’s Group III prices stayed weak for most of the past year, encouraging refiners to divert production towards Group II base oils instead.

Lower output leaves that segment of the market more exposed to price volatility and availability risk amid a pause in Group III shipments from the Middle East.

Covering that shortfall would require a rise in domestic Group III output and prices at levels that incentivized such a move.