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Group III supply held in a narrow range in March, contrasting with a surge in total base oils supply and pointing to more limited exposure to Middle East disruptions
The Middle East accounted for more than 40% of China's Group III supply, leaving some exposure to the global squeeze on premium-grade availability
Tight supply and higher prices provided the economic incentive to raise domestic Group III output, pointing to lower reliance on imports
China’s Group III base oils supply held in a narrow range in March and the first quarter, contrasting with a surge in total supply and pointing to more limited exposure to the loss of premium-grade flows from the Middle East.
Total Group III supply rose to more than 50,000 tonnes in March, up from less than 40,000 tonnes in February, OilChem China and General Administration of Customs data showed.
Volumes were still down 40% year on year and for the third time in four months.
The Group III segment remained small relative to China’s total base oils supply of more than 820,000 tonnes in March, limiting direct exposure to Middle East disruptions and the resulting global squeeze in Group III availability.
Even so, with the Middle East accounting for more than 40% of its Group III supply, China still faced some exposure to tightening global availability of premium-grade base oils.
Key Highlights
· Group III base oils accounted for 6% of China’s March supply, down from around 10% in 2025.
· First-quarter Group III supply was steady, contrasting with a 29% surge in Group II supply from the fourth quarter.
· Imports accounted for more than 50% of Group III supply in the first quarter, against around 20% for Group II.
· Imports accounted for less than 35% of China’s Group III supply in second-half 2024, when domestic production climbed to record-high levels before falling from the second quarter of 2025.
Market Repercussions
Tight global supply and surging prices incentivised blenders to reduce Group III consumption and to turn to alternative grades.
China’s rising overall base oils supply, alongside rangebound Group III volumes, pointed to such a trend already under way for at least the past year.
The higher import share of Group III supply in the past year covered declining domestic output, as domestic Group III prices moved closer to Group II levels.
Tight global supply, along with surging overseas and domestic prices, then provided the economic incentive to raise domestic Group III output and cut requirements for imports.
