China sets 2024 fuel oil import limit at 20 mil mt, 4% higher on year

China has set its 2024 fuel oil import limit at 20 million mt, up from 19.2 million mt for 2023, according to a policy document released by the Ministry of Commerce on its website late Dec. 26.

Total 208 companies are allowed to apply for fuel oil import quotas within the annual limit, the document dated Dec. 22 showed. The number of companies rises from 165 for 2023.

"It looks like the government relaxed controls in fuel oil imports and is willing to meet demand from the industry," a Singapore-based analyst said.

The country's fuel oil import limit became important in 2023 for China's independent refineries and western trading houses.

Chinese independent refineries increasingly used imported fuel oil in 2023 to compensate for a shortfall in feedstock as the government tightened crude import controls despite improved refining margins. That led the ministry to lift the limit for 2023 by 3 million mt, from 16.2 million mt set in January this year.

The limits were stable at 16.2 million mt for 2022 and 2021 as actual imports fell behind.

China imported 20.4 million mt of fuel oil in the first 11 months of 2023, according to customs data. The imports include barrels saved in bonded warehouses, which do not use fuel oil import quotas. The volumes stood at 12.23 million mt for 2022 and 13.63 million mt for 2021, customs data showed.

Meanwhile, independent refineries have heavily relied on sanctioned crudes in 2023, keeping western trading houses away. Imported fuel oil became one of the few feedstocks during the year that western trading companies could supply to the sector, several international traders said.

Like previous years, refineries or oil companies are required to apply for fuel oil import quotas cargo by cargo on a first-come, first-served basis until the annual limit is hit, according to independent refiners.