A joint venture between Richful and Farabi will construct Saudi Arabia's first lubricant additive plant

Rising Competition in a Crowded Global Market

Richful Xinxiang Company, a major Chinese producer of lubricant additive components and packages, has signed a Memorandum of Understanding (MoU) with Farabi Downstream Petrochemical Company to form a joint venture. This collaboration aims to establish Saudi Arabia’s first lubricant additive manufacturing facility.

Although specific details about the joint venture and its planned facility remain scarce, the announcement has generated significant industry interest. While local production of lubricant additives offers some advantages, some experts question the rationale behind the investment. They highlight that global additive production capacity already exceeds demand, particularly with expanding operations in India, Singapore, and China. Despite rising demand, the Middle East accounts for only a small portion of the global market.

Industry analysts suggest that the joint venture points to two key factors: first, the Saudi investors involved likely have substantial financial resources, as the venture may not yield exceptionally high long-term returns. Second, Richful appears to be expanding its commercial reach and manufacturing footprint beyond China. Notably, Western additive companies exited the Russian market following the Ukraine invasion, allowing Richful to establish a stronger presence there.

Although the project details remain unclear, it is expected that the new facility will produce key lubricant additives, including dispersants, detergents, ZDDP, and antioxidants—core ingredients in engine oil formulations.

While global additive production capacity exceeds demand, much of it is not concentrated in the Asia-Pacific region or other high-growth markets. This could pose a challenge for Western additive manufacturers, as the new joint venture is likely to cater to growing demand in these regions. As a result, industry experts anticipate that demand for Western additives in the EU and North America could decline. Consequently, U.S.-based additive plants may see a drop in capacity utilization over the next decade as they lose market share to Richful and other expanding operations in Asia.

Since no concrete details regarding the plant’s product lineup or timeline have been disclosed, it is possible that the project is still under review. However, if the joint venture proceeds as expected, the facility could drive lubricant additive prices downward, forcing Western additive suppliers to explore cost-cutting strategies to remain competitive.

The detailed article published by jobbersworld.com can be accessed from https://jobbersworld.com/2025/03/21/richful-and-farabi-jv-to-build-the-first-lubricant-additive-plant-in-saudi-arabia/