China Issues Third Set Of Fuel Export Quotas Under Processing Scheme
China has issued 9.06 million tonnes of refined fuel export quotas under so-called processing trade terms in its third batch of quotas, two trading sources with knowledge of the matter said on Tuesday.
The current round of quotas is 49 percent higher than last year's batch, which were all issued under the processing category, of 6.085 million tonnes. The new quotas increased the total number of processing permits to 24.76 million tonnes granted so far in 2017.
The quotas will be valid till the end of this year and were assigned to China National Petroleum Corp (CNPC), Sinopec Corp, China National Offshore Oil Corp (CNOOC) and Sinochem Group, the sources said.
The government issued 6.29 million tonnes of exports under the separate general trade category in May, taking the total under that scheme to 7.605 million tonnes for the year.
Combined by category, China has granted 32.365 million tonnes of fuel export quotas this year, and all to the same four state oil companies.
The Ministry of Commerce did not immediately comment.
The third round of export quotas rose to accommodate a growing surplus of refined fuel as overall Chinese refinery throughput is set to increase even with possible run cuts by Sinopec, as peak maintenance season ends and new capacity additions are expected later this year, said oil analyst Nevyn Nah of consultancy Energy Aspects.
"Even with run cuts, we still have Chinese run (rates) up conservatively by 600,000 barrels per day (bpd) year-on-year in the third quarter," said Nah.
For the latest batch of processing quotas, also called tolling quotas, Sinopec won 5.05 million tonnes, followed by CNPC at 2.7 million tonnes, Sinochem at 700,000 tonnes and CNOOC at 610,000 tonnes.
China earlier this year barred the country's independent oil plants from exporting fuel.
Under the general trade category, refiners get tax refunds after exports are completed or get a tax waiver on fuel exports, a policy that Beijing granted in 2016.
Under the processing rules, refiners are exempted from import taxes on crude oil and export taxes for oil products, but have fixed volumes and time slots to export, both under the tight scrutiny of Chinese customs.
China's demand for oil products will grow by 360,000 bpd this year, down from the annual demand growth of 550,000 bpd in 2016, said Energy Aspect's Nah.