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You are here: Home1 / News2 / China’s clean oil production ‘unlikely to grow’

China’s clean oil production ‘unlikely to grow’

Date: 5th September 2011 Author: Tyrepress Editors Comments: 0

China’s production of treated distillate aromatic extract (TDAE) – so-called ‘clean oil’, is “unlikely to grow significantly” according to a report published in online chemical industry journal icis.com. The reason? The “poor demand for the product” which itself is probably due to the fact that it costs 30 per cent more than the regular aromatics-based rubber oil.

According to the report, China started producing TDAE – which is now legally required for tyre manufacturing in the EU – this year. The output in 2011 is estimated to be less than 10,000 tonnes, according to the producers of the rubber oil. And furthermore, Chinese firms haven’t started exporting the product because only one producer has been able to meet EU standards.

Consumption of TDAE within China currently equates to 12.7 per cent of the country’s total rubber oil consumption, which was said to have been 786,700 tonnes in 2010, according to C1 Energy. Aromatic oils, on the other hand, reportedly account for 38.9 per cent. And the consensus is that demand is currently flat and when you look at the price differential you can see why. In terms of cost, high-end aromatic rubber oil in east China sold at 5,700-6,300 yuan/tonne ($893-987/tonne) on 5 September, about 2,950 yuan/tonne lower than the lowest offer for TDAE, according to C1 Energy data.

Apart from cost, the problem appears to be a lack of legislation in the area. ICIS.com reported that “unless the Chinese government issues regulations mandating its use, the TDAE is unlikely to be popular with most tyre and rubber product manufacturers”, citing industry sources. Furthermore, the length of time required for sample testing is said to slow down the development of the new product.

Foreign tyre makers that have production bases in China, such as Yokohama Rubber (China) and Continental AG Group, have a testing period that runs from four to eight months, said a source with Nantong Hong Sheng International Trade Co.

TDAE mainly imported

Instead of producing it domestically, ICIS.com reports that Chinese firms mainly source TDAE from abroad. It reportedly imported 118,000 tonnes in 2010 and is expected to import 120,000 – 140,000 tonnes this year, according to C1 Energy data.

Exports are severely hindered by the fact that currently, only Binzhou Refinery, a unit of China National Offshore Oil Corporation (CNOOC), is EU-certified. However, ICIS.com reports that China currently has five producers of TDAE.

Local consumption

As far as usage is concerned, the report added some fascinating insights: “The rubber oil produced by Zhejiang-based Hangzhou Zhongce Rubber – one of China’s top three tyre exporters – does not meet all the EU standards for exports, said a company source.”

And Cheng Shin Tire’s Kunshan factory reportedly uses 200 tonnes of TDAE each month, which is just 10 per cent of its monthly consumption, and it has not been growing given “limited exports.”

Shandong-based Triangle (Weihai) Huasheng Tyre’s is said to consume 100 tonnes/month of the new product, while its use of aromatics rubber oil is 600-700 tonnes/month.

And finally Cooper Chengshan (Shandong) Tire Co consumes aromatics and TDAE at 200-300 tonnes/month each, said the report, citing a Cooper Chengshan source.

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