An oil terminal off Waidiao Island, in Zhoushan, Zhejiang province, China, on July 18, 2022.STRINGER/Reuters
China has released 179.01 million metric tons of crude oil import quotas for 2024, 60 per cent more than the January batch last year as almost all the refiners received their annual allocations, consultancies and trade sources said on Tuesday.
The latest move marks a shift by Beijing, which has been releasing quotas in batches every few months since it opened up crude imports to independent refiners in late 2015. Uncertainty over quotas could hold refiners back from buying more crude when prices are low or ramp up purchases to meet higher demand.
Forty-one companies, mostly independent refiners were given the fresh quotas, trade sources and consultancy JLC and Longzhong said. The quota issued in January last year was 111.82 million tons.
These independent refiners now make up over a third of total imports into the world’s largest buyer as more large, integrated refiners have joined the fray in recent years.
The January allocation, equivalent to about 3.6 million barrels per day, is still short of the 203.64 million tons or 4.07 million bpd issued for 2023 and traders said there would be at least another batch to be issued later in the year. The 2023 volume included an odd tranche released in October 2022 in advance for 2023 and was 14 per cent higher than 2022.
Privately controlled Zhejiang Petrochemical Corp，the country’s single-largest refiner, was granted a quota of 40 million tons, in line with its annual processing capacity, while Shenghong Petrochemical, another privately-led refiner was granted 16 million tons which is also a full-year quota, the sources added.
The new issue is in addition to an odd batch of 3.68 million tons released around mid-December to 11 small independent plants that some sources said would be counted under 2024 although refiners were expected to finish using them by the end of 2023, several sources with knowledge of the matter said.
The Ministry of Commerce did not respond to a faxed request for comment.
Shandong-based Yulong Petrochemical, a sole major greenfield refinery expected to begin operations this year, was not among the recipients of the fresh batch. Last November, the refiner was granted its first-ever crude oil quota of 300,000 tons.
Under the fresh release, Dalian-based Hengli Petrochemical was allotted 19 million tons of quotas, bringing its 2024 annual total grant to 20 million tons including a separate tranche of one million tons received in December, which also matched its full-year processing capacity, said a company official.
Some traders said this gives refiners more flexibility in crude procurement based on demand and market dynamics while others said this is unlikely to lead to a major change in their crude purchasing patterns.
Beijing manages crude imports by independent refiners under a rigid quota system under a broad cap of 243 million tons, typically issuing several sets of quotas throughout the year but occasionally topping up with small additional quotas based on refiners’ import needs.
Crude imports by dominant state refiners Sinopec, PetroChina and CNOOC are not subject to this quota management.