China is in the midst of what may be the biggest, fastest surge of base oil capacity the world has ever seen, adding 3.4 million metric tons per year to what was already the world's second-largest base oil supply base. It is a gusher that undoubtedly reflects expectations that these projects will generate profits, but industry observers say they could also make business challenging for their operators and other refiners. The market they enter already has excess capacity and has yet to develop an outlet for exports. From June of 2018 through April of this year, Chinese refiners brought online at least six new base oil plants or plant expansions, and three more are scheduled to be completed by the end of this year. Before the first of those projects opened, China was easily the world's second-largest base oil producing country, with annual capacity of 9.1 million tons. If the remaining projects are completed at the sizes previously announced, the nation's capacity at the end of 2019 will be 12.5 million t/y, approaching the global leader, the United States, which has capacity of 13.2 million t/y-twice as much as the number three producer, South Korea. China's capacity will have jumped by more than a third in a year and a half.
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