Chinese qualified refineries win about 3.82 mil b/d crude import quota for 2025

China's 35 qualified refineries have won around 190.46 million mt (3.82 million b/d) of crude import quotas for delivery from Jan. 1, S&P Global Commodity Insights estimated based on various sources on Dec. 30.

The volume would be an increase of 7.7% from the 176.82 million mt (3.54 million b/d) in the same batch for 2024 issued in January, helping to boost China's crude imports in 2025.

Daxie Petrochemical in Zhejiang province, a joint venture held by CNOOC, has won its first crude import quotas of 3 million mt for the startup of its 12 million mt/year new plant in 2025.

Meanwhile, the state-owned Sinochem refineries in Shandong province, which are widely called ChemChina's plants, have been awarded 17.12 million mt quotas despite being shut down one after another following the announcement of their bankruptcy in September.

Sources close to the matter said the three Sinochem refineries are likely to resume operation in mid-2025. The 7 million mt/year Huaxing Petrochemical is expected to be the first to return, followed by the 5 million mt/year Zhenghe Petrochemical, they added.

Full-year allocation

Similar to the allocation for 2024, Beijing is likely to issue the full-year crude import quota in the first batch to almost all quota holders, suggesting that this has become the "new-normal" to offer flexibility for local refiners to plan their feedstock procurement from the beginning of the year.

The volume matches the balances against their annual limits, considering the advance allowance issued in November, sources said.

The government had released 6.04 million mt of crude import quotas for 13 independent refineries for use in 2024 on Nov. 21, comprising 200,000 mt to the Fengli Petrochemical in Henan province, and the 5.84 million mt to 12 in Shandong and Liaoning. The batch was an advanced allocation, and the volumes were set to be deduced from their 2025 annual quotas.

According to a Commodity Insights survey, nineteen of the remaining refineries were likely to have their allocation meet their annual ceiling.

Not all the official allocation documents were immediately available. Quota holders told Commodity Insights that they had received notices from the local government about their respective volumes.

In China, refineries built and operated by state-owned companies CNOOC, PetroChina, Sinochem and Sinopec do not need quotas to import crude, and integrated mega refineries have sufficient import quotas. All other refineries, including independents and those owned and operated by state-owned companies such as ChemChina and Norinco, require annual quotas.

More quotas likely to be awarded

The greenfield 20 million mt/year Yulong Petrochemical was among the 35 refiners that won less quota than its annual limit as its No. 2 10 million mt/year CDU has not yet started.

It was awarded 12 million mt quota in this batch as its No. 1 10 million mt/year CDU is operating at 102% capacity in December. The No. 2 CDU is unlikely to start up in the first quarter of 2025, according to market sources.

"Yulong is unlikely to commission the No. 2 CDU until all the secondary and petrochemical units connected to the No. 1 CDU run smoothly," a source close to the matter said, adding that "the process has been slow due to the weak demand in domestic market."

Sources estimate that an early startup of the No. 2 CDU would require more quota to meet demand, with April being the earliest possible timeline.

Data from Commodity Insights showed that the refinery is likely have imported around 4 million mt of crude in 2024, against 8.3 million mt allocated to it in April 2024.

Meanwhile, the 26.8 million mt/year Panjin Jincheng Petrochemical in Liaoning province could soon receive crude quotas in the next batch, as it has already passed a government review on refining capacity verification, market sources said.

Panjin Jincheng Petrochemical has applied for import quotas with a 15 million mt annual limit, despite currently being allowed to process crude imported via Unipec.

China's crude import quota allocations: