Chinese mainland will suspend the tariff concessions on 134 items imported from Taiwan region including lubricant base oil, starting on June 15, according to the Customs Tariff Commission of the State Council, which may result in a reduction in the base oil imports from Taiwan.
Taiwan, with a base oil production capacity of 600,000 t/y, is one of the top three suppliers of base oil in China, mainly Group II 150N and 500N base oil produced by Formosa Petrochemical.
2019-2023 China Base oil Imports by Origins (Unit: Kt)
Country |
2019 |
2020 |
2021 |
2022 |
2023 |
South Korea |
950 |
967 |
781 |
664 |
663 |
Singapore |
649 |
603 |
476 |
431 |
445 |
Taiwan |
433 |
292 |
237 |
204 |
235 |
Qatar |
145 |
180 |
211 |
201 |
187 |
Source: GACC, OilChem
Seen above, the imports from Taiwan in 2019 were the highest at 433,000 tonnes, and in 2022 were the lowest of only 204,000 tonnes, with a decline of 52.90%. And the proportion in mainland China's total imports in 2022 decreased from 16.20% to 11.40%. In 2023, the imports rebounded 15.20% year-on-year to 235,000 tonnes.
2022-2024 China Base oil Imports from Taiwan (Unit: Kt)
|
2022 |
2023 |
2024 |
Jan |
24.08 |
17.90 |
36.64 |
Feb |
34.75 |
24.25 |
11.99 |
Mar |
29.02 |
35.84 |
15.35 |
Apr |
17.87 |
18.88 |
18.26 |
Total |
105.72 |
96.86 |
82.24 |
Source: GACC, OilChem
In 2024, the imports in the first four months came in at 82,240 tonnes, down 15.10% from the prior year, because some end-users shifted to use domestically-produced base oil on its improving quality and attractive prices than imported goods.
Source: OilChem
There was a correlation between the prices of Taiwan Formosa's 150N and domestically-produced 150N, and the lower domestic prices than import prices attracted importers' buying interest.
OilChem prediction model showed that the total imports from Taiwan in 2024 may be basically the same as that in 2023 at around 230,000 tonnes, mainly because the long-term contracts for 2024 have been signed and will be executed according to plans.
However, with the suspension of the tariff concessions, the base oil imports are expected to decrease in 2025, which may fall to 150,000-170,000 tonnes.
Written by Sunny Fang, fss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com