China's August Base Oils, Lubricants Exports Reach Record High

China's base oils exports remained near record levels in August, expanding the country's role as a source of supply as availability from other major exporters remains lower than usual.

Base oils exports eased to 40,700 tonnes from a record 42,300 tonnes in July, but remained the second-highest on record, China’s General Administration of Customs data showed.

Lubricants exports rose to a record 46,400 tonnes from 40,000 tonnes in July, more than double year on year. Combined base oils and lubricants exports rose to a record 87,100 tonnes from 82,300 tonnes in July, itself the second-highest total on record.

The increase comes as exports from regional and global suppliers including Singapore, Taiwan and the US have weakened while Middle East supply remains disrupted, leaving fewer established sources for buyers.

China's ability to fill those gaps with rising exports is now extending further afield to markets including Europe, Russia and Nigeria.

Key Highlights

·         Base oils exports over the four months to August almost tripled year on year, to 151,500 tonnes from 51,500 tonnes.

·         Exports to Europe surged to a record 5,000 tonnes from 600 tonnes in July and average monthly exports of around 100 tonnes in 2025.

·         Shipments to Russia jumped to 2,000 tonnes, up from average monthly volumes of less than 160 tonnes over the previous two years.

·         Exports to Southeast Asia fell to 23,000 tonnes from more than 29,000 tonnes in July, cutting the region's share of total exports to 56%, from 69% in July and a typical share of about 71% in the year to July.

·         Lubricants exports to Japan rose to more than 3,600 tonnes, up from less than 290 tonnes a month in the year to April.

·         Shipments to Nigeria rose to 770 tonnes from 320 tonnes in July, also up sharply from an average of about 160 tonnes a month in the year to May.

Market Repercussions

China's own supply has kept pace with the export push. Group III production climbed to a 17-month high in August, allowing refiners to direct competitively priced cargoes into markets where supply is increasingly constrained.

The longer that Group III and premium-grade supply stays tight elsewhere, the more likely Chinese suppliers are to establish regular flows in new markets. That would leave buyers with a wider range of sources even after supply disruptions ease.

That advantage depends on China's own refiners sustaining high run rates. Higher crude oil prices, or a shift in refinery economics that favour diesel over base oils, could tighten China's own domestic supply and reduce the volume available for export.

The shift is already visible. Rising domestic diesel prices narrowed the discount to Group II prices to the smallest in more than a year by end-August. Higher base oils prices since early July have also reduced the price advantage of Chinese cargoes.