Growth Opportunities in the Chinese Fuel Additives Market

Focus Products—Lubricity Improvers and Cold Flow Additives for Diesel

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The Chinese diesel market is set to grow at a robust pace over the next 5 to 7 seven years as production of diesel vehicles increases and the introduction of China V specifications takes center stage. The implementation of China V regulations is key to the consumption of diesel, and in turn, lubricity improvers (LI) and cold flow (CF) additives. Lubricity improvers are estimated to grow at a strong CAGR of 11.9% between 2016 and 2022 while cold flow additives, which are predominantly used in winter diesel, will grow at a lower CAGR of 2.8%. Excess kerosene availability in China will also be a challenge for the growth of cold flow additives, as it is a cheap alternative. Local players in China currently dominate the supply of LI and CF additives to Sinopec and Petrochina.

The local players that dominate the market have excellent relationships with both Sinopec and Petrochina. These relationships are long-standing ones which gives them an edge over new entrants. New companies trying to tap opportunities in the LI and CF market in China are advised to partner with the domestic players, as it will enable them to get a ‘ foot in the door’ with the state-owned enterprises. Owing to these long-standing relationships, the technical specifications set by the refineries are published in such a way that most of these domestic players will qualify. International additive companies have superior technical specifications as compared to domestic players, but these improved specifications are often perceived as premium or expensive.

The procurement process for LI and CF is different between Sinopec and Petrochina. While Sinopec is predominantly a consumer of LI, Petrochina is a large consumer of CF, as Petrochina produces larger quantities of winter-grade diesel due to its locations in colder regions across China. While the procurement process for Sinopec is done completely at the headquarter level, the process for the procurement of CF is left to individual Petrochina refineries. This difference in the tender processes has made domestic additive manufacturers increase their sales and marketing staff in order to have a constant presence at the location of various refineries.

There are however interesting ways by which international LI and CF players can enter the China market and be successful. One of them is to partner with a strong domestic additive manufacturer. The other option is to provide value-added services such as refinery economics exercises, training workshops for refinery personnel on the advantages of using CF over kerosene as well as joint R&D exercises. These services will go a long way in building relationships with refineries, which is the cornerstone of success in the diesel additive market in China.

Table of Contents

1. Executive Summary
Key Findings
LI & CF Market Information Snapshot
Macroeconomic Outlook
Diesel and Kerosene Production and Consumption
LI Market Outlook
LI Value Chain Analysis
LI Typical Route to Market
Top LI Manufacturers in China
Refinery Procurement Practices
CF Market Outlook
CF Value Chain Analysis
CF Typical Route to Market
Top CF Manufacturers in China
CF Procurement Process
2. Diesel Regulations in China for Conversion from China IV to China V and China VI
China V Implementation Impact
Emission Limits for China V
Incentives for Refineries to switch to China V
China Refining Capacity
Refinery Utilization Trends
China V Implementation Map
3. China Diesel and Kerosene Outlook to 2020
Diesel Outlook—Refining Capacity
Diesel Outlook—Backward Capacity Elimination
Winter Diesel Outlook
Other Demand Drivers for Diesel
Aviation Kerosene
PetroChina Diesel and Kerosene Outlook, 2016 to 2020
China Refinery Expansion Plans
China Refinery Expansion Plans
4. Lubricity Improvers—Market Assessment
LI Market in China
Key Drivers for the LI Market in China
Key Challenges for the LI Market in China
Market Outlook for LI—Conditions for Ester Adoption
Market Share Analysis per LI Type
Distributor Criteria for Selecting a LI Manufacturer
5. Lubricity Improvers—Value Chain Assessment
Value Chain Analysis
Value Chain Analysis for LI Additives in China
Raw Material Analysis
Alternative Raw Materials for Lubricity Improvers
TOFA Imports into China
Typical Route to Market
Refinery Procurement Practices
Supplier Selection Criteria—Refinery Viewpoint
Supplier Selection Criteria—Manufacturer Viewpoint
Acid vs. Ester Product Awareness—Refineries
Ester-based LI Adoption
6. Lubricity Improvers—Competitor Assessment
Top 5 LI Manufacturers
Local LI Manufacturer Capabilities
7. Cold Flow Additives—Market Assessment
Market Outlook
Winter Diesel and Usage of Cold Flow Additives
Key Drivers for the CF Market in China
Key Challenges for the CF Market in China
Key Takeaways from China’s 13th Five-Year Plan
Refinery Configuration—Hydrocracking Capacities
Distributor Criteria for Selecting a Manufacturer of CF
8. Cold Flow Additives—Value Chain Assessment
Value Chain Analysis
Import of Aviation Kerosene by Country
Cold Flow—Typical Route to Market
Cold Flow—Procurement Process
Supplier Selection Criteria—Refinery Requirement
Product Awareness—Refineries
9. Cold Flow Additives—Competitive Assessment
Top CF Manufacturers in China
10. Conclusion
Porter’s 5 Forces Analysis for the LI Market
Opportunity for Emerging Players and Industry Threat
Porter’s 5 Forces Analysis for the CF Market
Opportunity for Emerging Players and Threats
11. Growth Opportunities and Companies to Action
Growth Opportunity
Strategic Imperatives for Success and Growth
12. The Last Word
3 Key Takeaways
Legal Disclaimer
13. Appendix
Definitions and Abbreviations
Learn More—Next Steps

Infographic



List of Figures & Charts

1. Fuel Additives Market: LI & CF Snapshot, China, 2017
2. Fuel Additives Market: Top 5 Manufacturers, China, 2017
3. Fuel Additives Market: Top 5 CF Manufacturers, China, 2017
4. Fuel Additives Market: Diesel Fuel Quality Roadmap, China, 2017
5. Fuel Additives Market: Emission Limit by Vehicle Type, China 2017
6. Fuel Additives Market: Implementation Timeline of Fuel Standards by Region, China, 2017
7. Fuel Additives Market: PetroChina Diesel and Kerosene Outlook, China, 2016–2020
8. Fuel Additives Market: Refinery Expansion Plans, China, 2017
9. LI Segment: Drivers, China, 2016–2020
10. LI Segment: Challenges, China, 2016–2020
11. LI Segment: Distributor Criteria for Selecting a Manufacturer, China 2017
12. LI Segment: TOFA Imports, China, 2017
13. LI Segment: Supplier Selection Criteria of Refineries, China, 2017
14. LI Segment: Supplier Selection Criteria of Manufacturers, China, 2017
15. LI Segment: Top 5 Manufacturers, China, 2017
16. CF Segment: Drivers, China, 2016–2020
17. CF Segment: Challenges, China, 2016–2020
18. CF Segment: Hydrocracking Capacity of Refineries, China, 2017
19. CF Segment: Distributor Criteria for Selecting a CF Manufacturer, China, 2017
20. CF Segment: Aviation Kerosene Import Breakdown by Select Country, Global, 2011–2017
21. CF Segment: Supplier Selection Criteria of Refineries, China, 2017
22. CF Segment: Top 5 Manufacturers, China, 2017


1. Macroeconomic Growth Outlook, China, 2015–2020
2. Diesel Production and Consumption Forecast, China, 2015–2020
3. Kerosene Production and Consumption Forecast, China, 2015–2020
4. Lubricity Improver Demand, China, 2015–2020
5. Fuel Additives Market: LI Value Chain, China, 2017
6. Fuel Additives Market: LI Route to Market, China, 2017
7. Cold Flow Demand, China, 2015–2020
8. Fuel Additives Market: CF Value Chain, China, 2017
9. Fuel Additives Market: CF Route to Market, China, 2017
10. Fuel Additives Market: CF Procurement Process, China, 2017
11. Number of Refineries*, China, 2015
12. Refinery Utilization Trend, China, 2010–2015
13. Diesel Production—Scenario 1, China, 2015–2020
14. Diesel Production—Scenario 2, China, 2015–2020
15. Winter Diesel Outlook, China, 2016–2020
16. Heavy Commercial Vehicle Outlook, China, 2015–2020
17. Aviation Kerosene Imports, China, 2011 to 2015
18. LI Segment: Base Case Scenario, China, 2015–2020
19. LI Segment: Demand* Forecast, China, 2015–2020
20. LI Segment: Market Share by LI Type, China, 2015, 2017, and 2020
21. LI Segment: Value Chain, China, 2017
22. LI Segment: Route to Market, China, 2017
23. CF Segment: Demand Forecast, China, 2015–2020
24. CF Segment: Value Chain, China, 2017
25. CF Segment: Route to Market, China, 2017
26. CF Segment: Procurement Process, China, 2017



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