Royal Dutch Shell PLC will break ground on a $100 million lubricant blending plant in the northern port city of Tianjin. The plant, scheduled to come online in early 2015, will eventually produce 300,000 metric tons of lubricants per year and is geared to fulfil the growing demand for lubricants in China.
Executive vice president of Shell Global Commercial, Mark Gainsborough, is bullish about lubricants sales in the growing economy and expects 50% of the global growth in lubricants demand to come from China.
Fellow Shell Global Commercial manager, Shen Jian, revealed that upon its completion in 2015, the new plant will boost the company's combined lubricants production capacity in China to around 1.5 billion litres a year.
While Shell execs remain optimistic, other commentators are highlighting the pressures faced by lubricants producers in China. Commodities analyst, Xu Yanbin, notes that Shell products are, on average, 60% higher than their local competitors and are therefore uneconomic for domestic consumers. Ferocious price wars between small and medium-sized private lubricants plants have forced many companies into bankruptcy, with the total number of such companies falling from 3,000 in 2002 to 1,700 a decade later.
Published 22nd August, 2012
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