Several Chinese independent oil refiners, commonly known as 'teapots', are getting ready to start buying ethanol and blend it with their fuel to meet China's regulation that says by 2020, gasoline in the country should contain 10 percent ethanol, Reuters reported on Tuesday, citing sources at the refiners.
The Chinese government announced in September last year a new nationwide ethanol mandate to expand the mandatory use of E10 fuel-gasoline containing 10 percent ethanol-from 11 trial provinces to the whole of China by 2020. Ethanol consumption in China would at least quadruple in the next three years due to this nationwide mandate, according to the Agricultural Policy Review of Iowa State University.
China's largest independent refiner Dongming Petrochemical Group has already obtained permits from the Ministry of Commerce to start ethanol blending, three company sources familiar with the matter told Reuters.
Dongming Petrochemical plans to begin importing ethanol via its trading arm Pacific Commerce Pte for its refinery and for sale on the market. The refiner is also thinking of building its own ethanol plant, according to one of the company sources.
Shandong Wonfull Petrochemical Group and Henan Fengli Petrochemical Co have also applied to obtain licenses to blend ethanol, company sources told Reuters, although it was not immediately clear when those two independent refiners would get their permits.
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A fourth independent refiner, Shandong Haike, is currently studying the ethanol market and regulations, and could also apply for permit, a source at Haike told Reuters.
In addition, some teapots have also reportedly contacted China's state-run agricultural producer and top ethanol producer COFCO about possibly buying ethanol.
China is the world's third-largest ethanol producer and consumer after the United States and Brazil. China's total ethanol production-including potable beverage, fuel, and other industrial chemicals-for 2018 is expected to increase by around 10 percent from 2017, according to the 'Biofuels Annual' report by the USDA Foreign Agricultural Service. Fuel ethanol production is forecast to tick up modestly from the 2017 estimate, according to the report.
By Tsvetana Paraskova for Oilprice.com
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