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Shandong-Based Independent Refiners Cut Primary Facilities

OIL PRODUCTS
StoryEnergy BulletsCommodities

Increased tax burden on imported feedstock fuel oil has forced some Shandong-based independent refineries in China to cut their primary facilities in February, Platts reports citing sources. 

  • Since Jan. 1, China has allowed refiners to offset just 40-80% of its Yuan 1,218/mt ($167.14/mt) consumption tax on fuel oil imports based on the yield, compared with a 100% rebate previously.
  • China has also just raised its fuel oil import tariff to 3% in 2025 from 1% previously, resulting in a cost increase of Yuan 60-100/mt ($7.89-13.70/mt), Platts reports.
  • Fuel oil serves as a crucial alternative feedstock for “teapot” refineries in Shandong, especially for those restricted from processing imported crude oil.
  • The average utilisation rate of independent refineries without crude import quotas across the country dropped to a record low of about 16% as of Feb. 8, according to OilChem data cited by Platts.
  • Four plants in Shandong with a combined refining capacity of 222k b/d have shut their crude distillation units due to losses incurred from processing fuel oil, Platts reports citing sources.
  • "Teapots have been almost absent from the market. [There is] no demand [for fuel oil] at this moment," said a source with an independent refinery based in Zibo, eastern Shandong province.
  • Other refinery sources said that operating only secondary units with semi-products is unsustainable and cannot be maintained for long, Platts reports. 
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Increased tax burden on imported feedstock fuel oil has forced some Shandong-based independent refineries in China to cut their primary facilities in February, Platts reports citing sources. 

  • Since Jan. 1, China has allowed refiners to offset just 40-80% of its Yuan 1,218/mt ($167.14/mt) consumption tax on fuel oil imports based on the yield, compared with a 100% rebate previously.
  • China has also just raised its fuel oil import tariff to 3% in 2025 from 1% previously, resulting in a cost increase of Yuan 60-100/mt ($7.89-13.70/mt), Platts reports.
  • Fuel oil serves as a crucial alternative feedstock for “teapot” refineries in Shandong, especially for those restricted from processing imported crude oil.
  • The average utilisation rate of independent refineries without crude import quotas across the country dropped to a record low of about 16% as of Feb. 8, according to OilChem data cited by Platts.
  • Four plants in Shandong with a combined refining capacity of 222k b/d have shut their crude distillation units due to losses incurred from processing fuel oil, Platts reports citing sources.
  • "Teapots have been almost absent from the market. [There is] no demand [for fuel oil] at this moment," said a source with an independent refinery based in Zibo, eastern Shandong province.
  • Other refinery sources said that operating only secondary units with semi-products is unsustainable and cannot be maintained for long, Platts reports.