1. Analysis of base oil market

　　Longzhong data shows that the total output of the base oil market in April was 726,450 tons, an increase of 18% from the previous month. In April, the total output of paraffinic base oil was 310,500 tons, the naphthenic base oil was 133,600 tons, and the second-class base oil accounted for 83% of the total output. The operating rate in April was 45.4%, an increase of 8.87% from the previous month.

Figure 1 Statistics of domestic base oil production in April

Source: Longzhong Information

In the middle and late of April, after the news that three new production capacity devices were started one after another, the market price fell, and downstream users were obviously bearish about the outlook. With the reduction of oil refining costs in May, the base oil market price is expected to follow a further sink. In addition, due to the impact of the new production released in May, the market supply and demand contradictions have intensified. It is expected that there will still be 200-300 in the base oil market in May. RMB/tonne downside.

　　Figure 2 Analysis of the trend chart of mainstream transaction prices in various regions in China this week

Source: Longzhong Information

2. Analysis of lubricant market

After the outbreak of the domestic lubricant market, demand gradually recovered. The demand for automotive lubricants and industrial lubricants increased significantly in April. The inventory of large and medium-sized lubricants factories has gradually been digested and entered the replenishment cycle, which led to the emergence of base oil market prices in April. Significant increase, with a cumulative increase of about 300-400 yuan/ton. According to the production situation of 109 downstream lubricating oil factories surveyed by Longzhong, the lubricating oil factory was fully resumed in April, and the oil consumption reached 94170 tons, an increase of 18.53% compared with March. Among them, 81 companies completed the purchase, with a total purchase of 9255 tons. The largest purchase volume is mainly in East China and North China, accounting for 51.43% and 28.96% respectively.

　　Figure 3 Analysis of oil consumption of lubricating oil factory in April

Source: Longzhong Information

Table 1. Purchase volume of base oil in April 2020

　　 Unit: Ton

Source: Longzhong Information

Downstream lubricating oil factories used more high-viscosity base oils in April, so the demand for high-viscosity purchases increased significantly faster than low-viscosity base oils. The 350N and 500N-based high-viscosity base oils increased seasonally.

　　 Figure 4 Proportion of base oil procurement types

Source: Longzhong Information

　　Inventory of the enterprise: After the full-scale resumption of production, the oil consumption of the factory increased. In early April, the enterprise's inventory gradually consumed from the high level to the low level, accounting for 26.45% of the inventory. Starting from the third week, due to the increase in end-user orders, the shipment was positive, and the factory began to restock the raw materials. As of the end of April, the proportion of factory inventory increased by 47.92%.

　　 Figure 5.4 inventory of downstream enterprises

　　 Unit: Ton

Source: Longzhong Information

Lubricant factories' enthusiasm for picking up goods increased significantly compared with March, but sanitation events still inhibited economic activity. Small and medium-sized lubricating oil factories purchase raw materials based on terminal demand and sales volume. The oil recovery cycle has been extended from previous years, and some large factories have resumed their original procurement cycles , Stable procurement on a weekly or monthly basis.

　　 3. Analysis of tender information of terminal lubricant users

　　Longzhong data shows that the number of lubricating oil tendering enterprises in April was 316, an increase of 10 from the previous month, and an increase of 3.3% from the previous month. However, the number of bidding announcement orders decreased, and the total quantity of lubricants inquiries was 977.51 tons, a decrease of 44.8 tons from the previous month and a decrease of 4.4% from the previous month. In April, orders for East China were 267.8 tons, South China 208.2 tons, Northwest China 168.1 tons, Southwest China 141.1 tons, North China 135.2 tons, and Northeast China 57.2 tons.

　　Figure 6 Orders of lubricants by region in April

Source: Longzhong Information

In April, the order quantity of gear oil was 308.6 tons, the order quantity of grease was 218.1 tons, other industrial lubricants were 212.6 tons, hydraulic oil was 155.9 tons, other vehicle lubricants were 61.6 tons, and antifreeze was 18.8 tons.

　　Figure 7 Orders of various lubricants in April

Source: Longzhong Information

　　 1. The significant increase in the resumption rate of domestic enterprises has led to an increase in the number of end users of lubricants;

　　 2. Fluctuations in international crude oil have increased uncertainty in the market. Lubricating oil end users are more of a wait-and-see attitude. Most of their purchases are dominated by small orders.

Longzhong analysis: The purchase amount of lubricating oil by end users in April decreased slightly compared with March, but the decrease was small and remained basically stable. Entering May, with the further recovery of the end market demand, it is expected that the lubrication in May Oil demand will continue to increase steadily.