- Home
- About Us
- Newsletter
- Americas
- EMEA
- Asia
- Market Signals
- Companies
- News
- Weekly Magazine
China’s Group III supply held firm in July even as imports from the Middle East collapsed
Domestic output is helping China avoid the deeper Group III supply squeeze seen in the US and Europe, where Middle East flows have also fallen sharply
The steadiness is keeping China's own blenders supplied while their counterparts elsewhere face a growing Group III squeeze
China's Group III base oils supply held firm in July despite a collapse in imports from the Middle East, as rising domestic output filled the gap and kept the country from adding to the global supply squeeze.
China's Group III base oils supply, or output and imports combined, held at close to 50,000 tonnes in July, edging down from more than 52,000 tonnes in both May and June but up 26% from a year earlier, General Administration of Customs and OilChem China data showed.
It was the third straight month of year-on-year growth, with supply broadly in line with the 2025 monthly average of around 51,000 tonnes.
The steadiness contrasted with slumping Group III supply in the US and Europe, where the loss of Middle East barrels has hit much harder.
China's also saw its own Group III imports from the Middle East collapse. Combined shipments from Qatar, Bahrain and the UAE fell to less than 4,000 tonnes in July, the lowest since April 2020, from typical monthly volumes of more than 20,000 tonnes before May.
China's Group III supply still held firm, as steady imports from Southeast Asia and domestic output running near a 16-month high made up the difference.
Key Highlights
· Group III accounted for less than 10% of China's total base oils supply in both 2025 and 2026, a much smaller share than in Europe or the US, where Middle East barrels covered a significant portion of a much larger Group III market.
· Middle East shipments had accounted for more than 40% of China's Group III supply in 2025 and the first quarter of this year.
· The share fell to less than 20% in the three months to July, but total Group III supply held steady.
· Domestic Group III output held close to a 16-month high, partially offsetting the drop in imports.
Market Repercussions
China's resilience means it has less need to compete as hard for the same shrinking pool of Group III supply squeezing buyers in the US and Europe.
Domestic blenders are the direct beneficiaries, continuing to receive steady Group III flows even as their counterparts elsewhere are forced to reformulate or trim output of high-end lubricants.
It also gives China's refiners room to direct any additional output toward exports without straining domestic supply.
China’s record-high base oils exports in July showed that some of that additional supply is already reaching overseas markets, expanding the country’s presence as other suppliers struggle to meet demand.
