China's Ministry of Commerce issued the first crude import quotas for the nation's 'teapot' refineries for 2017. The quotas are higher than the amount teapots actually imported in 2016, which suggests dirty tanker transits into China could remain steady or improve this year.
Ahead of the country's upcoming New Year, China approved the use of some 45.64 million tonnes of foreign crude for the 19 independently owned refineries.
The quota amount likely covers imports for the first half of 2017, Energy Aspects researcher Michal Meidan says. Since the first quotas were issued in July 2015, teapot refineries received licenses to use about 87 million tonnes of foreign crude.
She says China staggers the quota allocations so year-on-year comparisons are difficult. But the current quota allocation was based on import volumes from January through October of last year.
Meidan says the quotas represent a little more than the actual level imported by the teapots. She estimates teapots accounted for around 42 million tonnes of imports into China last year.
"So in reality the teapots haven't been penalised and may well receive additional quotas in the second half of 2017," Meidan said. "We think they may import more" this year.
Demand from teapot refineries were seen as driving spot VLCC fixtures higher last year, Poten said. The northern Chinese port of Qingdao saw major tanker congestion last year due to the increased demand from teapots.
