China’s Small, Independent Refineries Expect 3mn T Fuel Oil Quota Hike

China's small independent refineries expect the government to raise the fuel oil import quota for 2023 by 3mn tons for non-state-owned companies to allow them to bring in more barrels as an alternative feedstock for the remainder of the year, sources told S&P Global Commodity Insights.

• The annual limit was set at 16.2mn tons at the beginning of the year. This has been kept stable for several years as the fuel oil quotas were more than sufficient either due to slow refining demand or abundant crude oil imports.
• Refineries and oil companies are required to apply for the fuel quota cargo by cargo until the annual limit is reached.
• Demand for fuel oil this year has risen, and small independent refineries have almost used up all of the quotas as of end-October due to competitive prices of Russian fuel oil, strong refining margins in the first half of the year and tight crude import quota availability.
• China imported 17.38mn tons of fuel oil during Jan-Sept this year, compared with 7.65mn tons for the same period last year, customs data showed. These imports include barrels saved in bonded warehouses, which do not consume fuel oil import quotas.