China issues massive crude oil import quotas at start of year

China has front-loaded its oil import quotas for 2024, with an allocation to private refiners and traders that nearly matches all of the allowances granted for the whole of last year.

In a move that surprised the market, Beijing has issued quotas for 179.01 million tons — or 3.59 million barrels a day — of crude imports for the year ahead, according to industry consultancy JLC. Including a preliminary allocation in December, the total for 2024 now stands at 183.69 million tons, just a sliver below the quotas awarded for 2023.

JLC said it’s the first time that nearly a whole year’s quota has been issued in one go, and the injection of certainty should help smaller private operators map out their year. China’s big state-owned refiners aren’t subject to import limits.

“On the premise that total volume is under control, refiners can better arrange their raw materials purchases and production plans for the full year,” the consultancy said. 

Chinese refiners have been slow to snap up spot cargoes in recent months due to a lack of quotas, driving a plunge in prices of the Middle Eastern barrels that are mainly purchased by Asian buyers. Now traders are waiting to see whether a full allocation will jump-start the market. 

The quota awards include 40 million tons for Zhejiang Petroleum & Chemical Co., 20 million tons for Hengli Petrochemical Co. and 16 million tons for Shenghong Group, JLC said.

Still, it’s likely that the government will issue additional quotas later in the year given the start-up of the Yulong mega refinery in Shandong, OilChem said in a note.