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China to Impose Limits on Refining Industry

OIL PRODUCTS

China has set new conditions for the size of new refineries and will outlaw small crude oil processors under plans to cap capacity at 20m b/d by 2025.

  • The measures to cap capacity will likely lead to the closure of smaller refineries, particularly China’s ‘teapots’ – small independent refineries mainly based in Shandong province., Around 0.4m b/d of such capacity had already been mothballed in 2020-2021.
  • China’s current capacity is 18.4m b/d, with recent growth boosted 1.52m b/d after three large new refineries came online, according to Reuters.
  • Utilisation rates in China remain low, averaging 73% in 2022, compared to 71% in the USA.
  • A further 1.2m b/d of capacity is due to come online according to planned refineries being brought into operation.

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