China's independent refineries are required to obtain certain import quotas issued by the government before importing crude oil as the raw material. Looking back on the past five years, the import quotas varied in accordance with the commissioning rhythm of new CDU capacities, as well as the elimination of outdated capacities.
Source: OilChem
One prominent feature is that the import quotas assigned to refining-chemical integrated refineries have been rising year on year with new projects coming on stream constantly.
In detail, integrated refinery A firstly commissioned on December 8, 2018, and obtained 5 million tonnes import quotas in the same year for firing. Integrated refinery B put its Phase I project into production in 2019, while integrated refinery C came on stream in 2022. The corresponding import quotas increased steadily until these refineries reached full production.
In addition, Shandong Yulong Petrochemical is expected to commence production in 2024, hence the import quotas assigned to integrated refineries will keep rising.
The monthly crude oil imports of integrated refinery A and B averaged 1.65 million t and 3.11 million t respectively year-to-date, rising 6.15% and 22.79% compared with last year, per OilChem tracking. Refinery C started to import crude oil from H2 2022, and its monthly average import volume in 2023 reached 1.26 million t.
The import quotas for traditional independent refineries, on the other hand, have been falling as outdated capacities are being eliminated or integrated for industry upgrading and carbon reduction.
By comparison, the operating mode of integrated refineries is similar to state-owned ones as they both source crude oil with long-term orders, against traditional independent refineries purchasing on the spot market.
Looking ahead, OilChem believes that there are few possibilities that the government will issue a fourth batch of import quotas for independent refineries, but the first batch for 2024 is expected to be launched in December, based on historical practice.
Meanwhile, with Yulong Petrochemical expected to come on stream in 2024, the total import quotas are likely to grow further from the level in 2023.
Written by Aggie Hu, huchenying@mysteel.com
Edited by Navy Liu, liuchuanjun@mysteel.com