China has allocated a massive batch of crude oil import quotas to refiners, raising the allowances from early last year by around 60% and allocating full-year quotas to some, according to consultancies and traders.
The early allocation of a large volume of import allowances would help refiners better plan their crude purchases in 2024, the experts told media on Tuesday.
For 2024, China released a total of 179.01 million metric tons of crude import quotas, compared to a quota of 111.82 million tons issued in the first batch of quotas for 2023, traders and consultancies told Reuters.
A total of 41 refiners, mostly independent crude processing facilities, were allocated the quotas and some of those received full-year quotas, consultancies JLC and Longzhong and trade sources told Reuters.
Together with a small batch for 2024 issued in December 2023, the total crude import quotas allocated to Chinese refiners are now equal to all the four batches of import quotas issued in 2023, according to Bloomberg's estimates.
This is the first time that China has allocated a year's worth of quotas in one batch, consultancy JLC told Bloomberg. The high volumes of import allowances are expected to give independent Chinese refiners better visibility on their plans to purchase crude oil throughout 2024.
"On the premise that total volume is under control, refiners can better arrange their raw materials purchases and production plans for the full year," Bloomberg quoted analysts at JLC as saying.
At the end of 2023, with nearly no crude oil import quotas left, China's independent refiners stayed away from the spot crude market, which resulted in lower Chinese crude oil imports and lower prices for the Middle Eastern crude grades.
With one large refinery, Yulong in Shandong, slated to start up this year, China may not be done with the allocation of crude oil import quotas for 2024, according to a note from OilChem cited by Bloomberg.
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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