China relaxes lubricant exports

The "2016 Catalogue of Goods Subject to Export License Management" issued by the Ministry of Commerce of China temporarily allows domestic general import and export trading companies to export lubricants, greases, and base oils.

All along, the export of these three types of products must go through one of the three major state-owned trading companies, namely China National Chemical Corporation, China International Petrochemical Corporation under Sinopec, or China United Petrochemical Co., Ltd. under PetroChina. Therefore, as a major exporting country, China's export performance in lubricating oil is not particularly significant.

Due to the relaxation of export rules, Chinese lubricants may soon be available in foreign markets.

Now, import and export companies can export lubricating oil as long as they have an export license. The export license system is a measure implemented by the state to control the export of goods, generally used for domestically scarce goods or essential raw materials for production, such as lubricants, rare earths, and citric acid. After the cancellation of export quotas for lubricants, greases, and base oils in 2008, the country switched to using export licenses, but still required the export of these three types of products through the three major state-owned trading companies.

Due to the fact that the three major companies tend to export state-owned branded lubricants, such as PetroChina's Kunlun and Sinopec's Great Wall, small brand lubricants rarely have the opportunity to go abroad in pure export form.

Opening up exports may help alleviate the oversupply of lubricants and base oils in the domestic market. According to a report by Beijing Zhiyan Consulting, due to the rapid increase in domestic refining capacity, oversupply may be the "new normal".