China to upgrade or phase out 30% of refining capacity
China is stepping up an overhaul of its refining and petrochemical sector after the Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) in June 2025 launched a nationwide survey of petrochemical facilities that have been operating for more than 20 years. Provinces were ordered to submit evaluation results and upgrade plans by August 30, 2025.
The move marks a policy shift: Beijing is broadening its focus from phasing out facilities older than 30 years to a framework that weighs both safety and environmental performance.
Capacity Impact
The latest round of retirement and retrofit campaign extends the scope of "aging facilities" from over 30 years in operation to over 20. Petrochemical facilities older than 20 years account for roughly 30% of China's total refining capacity, concentrated at Sinopec and PetroChina. About half of that capacity has been online for more than 30 years and is likely to be eliminated, while the remainder is expected to be upgraded. Aging capacity for key chemicals such as ethylene, PE and PP is estimated below 15%.
Implementation Plans
Plants aged 20-30 years will generally be targeted for green and digital retrofits to extend service life rather than immediate exit. Still, policy momentum has intensified since late 2024: regulatory requirements now combine safety and green-performance criteria, prompting some state-owned firms to curb new chemical-unit investments and accelerate the phase-out of small, high-emission refinery capacity.
Policy Logic: Why Expand the Scope Now?
Three main drivers stand out:
- Equipment Renewal and Investment Stimulus - Following the 2024 phase-out of high-risk units, attention is now on upgrading remaining assets, supporting both safety and industrial investment.
- Carbon and Green Transition - Retrofits aligned with energy efficiency, digitalization, and emission reduction help advance China's "Dual Carbon" goals.
- De-capacity and Market Discipline - With producer prices falling and overcapacity mounting, the shift aims to eliminate inefficient units (30+ years) while upgrading viable ones (20-30 years), curbing disorderly competition and concentrating resources among leading players.
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Our full report provides in-depth analysis of China's 2025 petrochemical capacity overhaul:
- Key priorities vs. the 2024 phase-out campaign
- Impact on refining and chemical capacity
- Policy implementation outlook
- Market response: shutdowns and retrofits among major state-owned refineries
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com.
