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China’s base oils supply stayed near multi-year highs in April with domestic output accounting for an unusually large share of total supply
Strong Group II self-reliance limited exposure to higher regional prices, though Group III remained reliant on Middle East supply
Planned Group III capacity additions pointed to a longer-term shift away from reliance on Strait of Hormuz-linked supply
China's base oils supply stayed near a five-year high in April for a fourth straight month, shielding the domestic market from the disruptions affecting other regions.
Total supply, combining output and imports, came to more than 710,000 tonnes in April, down from close to 830,000 tonnes in March but still the second highest since mid-2021, General Administration of Customs and OilChem China data showed.
China’s high domestic production reduced its reliance on imported Group II base oils.
But the market remained more exposed in Group III, where imports still accounted for more than half of total supply.
Key Highlights
· Imports amounted to 18.5% of China’s total base oils supply in April, down from more than 21% in 2025 as domestic production accounted for a larger share of availability.
· Group II imports amounted to less than 17% of China's total Group II supply in April, and Group I imports to less than 16% of Group I supply.
· Group III imports amounted to 52% of China's Group III supply, with most of those imports originating from the Middle East.
· Group III base oils accounted for 7% of China's total base oils supply in April, while Group II grades amounted to more than 80%.
Market Repercussions
China’s high level of Group II self-reliance curbed demand for additional imports and freed up more regional supply to move to other markets.
The Group III picture remained different. Surging domestic prices reflected the cost of relying on imports for more than half of supply.
But Group III accounted for a much smaller share of China’s total base oils market than in the US and Europe, limiting the impact of tighter premium-grade availability.
Even so, elevated prices and a reliance on overseas markets incentivised higher domestic Group III production, while also accelerating the start-up of new units.
That shift was already under way before the Middle East disruptions, with new Group III capacity being built in China, the US and Europe.
Additional capacity would reduce reliance on Group III supply routed through the Strait of Hormuz.
