Chinese lubricant makers face dilemma

Chinese lubricant manufacturers are in a dilemma: They cannot decide whether they should raise the price of their products or not. Global crude oil prices’ decline in August did not prevent foreign petroleum giants like Shell and ExxonMobil to mark up their first-tier dealers. Their price increase was attributed to the increase in prices of raw materials, such as base oil and additives. Lubricants made in China have a majority share in the Chinese market, but local producers are afraid that they might lose their market share if they increase their prices. In the first half of 2011, China’s apparent lubricant consumption rose by 13.5%, while lubricant output rose by 13.9% from the previous year. PetroChina Company Limited and its arch rival China National Petroleum Corp. (CNPC) hold around 60% of the domestic lubricant market. Private Chinese companies hold a 20% stake of the market, while the remaining 20%, which represents the high-end sector of the market is held by foreign brands. (September 6, 2011)