China has given private refiners an additional quota to import fuel oil this year, the Chinese Ministry of Commerce said in a notice on Monday quoted by Reuters.
The additional import quota for a total of 3 million metric tons of fuel oil raises the overall quota for the fuel allowed to be imported this year to 19.2 million tons, per Reuters estimates.
Early this month, authorities in the province home to most of China's independent refiners were said to have asked the central government to allocate additional quotas for fuel oil imports as the refiners look to boost processing this month and next, but lack enough crude oil import quotas.
The independent refiners, the so-called teapots based in the Chinese coastal province of Shandong, have received lower quotas to import crude oil this year.
So they were seeking, through the provincial government of Shandong, to be allowed extra fuel oil supplies, which are cheap and can be processed into diesel and gasoline.
The Shandong government has asked for an additional 3 million metric tons of fuel oil quotas for the remainder of this year, according to traders and analysts who spoke to Reuters at the beginning of November.
China issued the last batch of crude oil import quotas for this year early last month, but independent refiners were allocated smaller quotas. The teapots have also exhausted most of the previously allowed crude import quotas for the year.
With limited crude import quotas and falling refining margins, Chinese refiners have reduced utilization rates in recent weeks.
Weakening margins and limited fuel export quotas have had refiners scale back utilization rates, analysts told Reuters earlier this month.
Now that the Chinese government has granted additional fuel oil import quotas to China's independent refiners, they could boost processing using lower-priced fuel oil, including from Russia.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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Comments
China’s fuel import quotas in 2923 have broken all previous records.
Dr Mamdouh G Salameh
International OIL Economist
Global Energy Expert