SINGAPORE: China has issued 35.24 million tonnes of crude oil import quotas to non-state refiners in a second batch of allowances for 2021, a 35% drop from the same slot last year, according to a document seen by Reuters and two sources with knowledge of the matter.
The sharp decline comes after a recent crackdown on trading of such quotas as Beijing works to consolidate its bloated refining industry and reduce emissions.
Analysts expect the changes in quotas and newly imposed taxes on bitumen feedstock to reduce independent refiners’ crude imports and their refinery utilisation rates in the second half of the year although state refiners will ramp up crude imports and fuel output to reap higher domestic margins.
“Independent refiners may have to operate at lower operating rates due to a lack of feedstocks,” analysts at Chinese consultancy JLC said in a note. These refiners are likely to draw on commercial inventories in China while processing fuel oil that they had bought earlier, said Liu Yuntao, China analyst at consultancy Energy Aspects. The impact on refiners’ run rates will become more evident in the fourth quarter as they gradually use up oil in storage, Liu added.
A total of 39 companies, led by two large private refiners -Zhejiang Petrochemical Co (ZPC) and Hengli Petrochemical - will receive quotas issued in the second batch for 2021. ZPC and Hengli will each receive 3 million tonnes.
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