Chinese base oil producer to start new unit in April

Chinese base oil producer Hainan Handi Sunshine Petrochemical plans to start test runs from April at a new premium-grade unit in south China.

The new plant's initial capacity of 700,000 t/yr consists of a combination of Group II and Group III base oils, as well as white oils and oil products such as diesel. Base oil output accounted for some 450,000 t/yr of the capacity. It plans to expand the initial capacity to 1mn t/yr in its second phase of production.

Even with the start-up of this new unit, Hainan Handi Sunshine plans to maintain normal output at its existing 300,000 t/yr Group II base oil unit in south China's Hainan.

The company said it has secured feedstock supplies for the unit through long-term contracts from domestic and overseas refiners and trading firms. It has already started testing single units at the plant before full test runs begin next month.

Hainan Handi Sunshine had previously expected to start up the new plant several years ago. But various delays pushed back the start-up date.

The start-up of the new unit will add to a large number of new base oil units that have begun operations in China over the past two years. Most of these new units produce light-grade base oils. They also had no original equipment manufacturer (OEM) approvals, especially at the outset.

The recent surge in base oil prices in China has been more pronounced for heavier grades and for Group III base oils with partial or full OEM approvals.