Those of you who watch China’s petcoke supply equation will know there is a small but important niche in China’s anode grade petcoke market - the small independent or “teapot” oil refineries. Most of the almost 50 refineries are located in Shandong province.
For years this group of refineries has been lobbying Beijing to allow them to import of crude oil directly, rather than through the major importers. And for years, Beijing has refused the request, each year allowing only 1.8 million tonnes of crude oil to be imported outside of the major import licence holders (companies like Sinopec and CNOOC import about 280 million tonnes, and growing.)
It’s an important part of the picture for those wanting to vary the blends of cokes going into anodes. Teapot refineries often offer parcels of low sulphur anode grade coke to the domestic China market, and often at discounted prices, but the problem is, they can’t offer continuous supply. Most of their feedstock comes from fuel oil and other sources (although we have heard of some refiners importing crude oil by giving it another name).
But that stand-off seems to have finally made some progress, although only a limited small step. Beijing has granted a licence to import crude oil to a company called Guanghui Energy. The licence allows this company to import up to 200,000 tonnes of crude oil per year.
It’s a small step because this company is based in Xinjiang, and will import the crude across the border from Kazakhstan. The majors have resisted any attempts by the teapot refiners to import oil, so this licence may be a small step towards opening this market. It may also be the exception, allowed for by the remote location and source of oil. Let’s hope that this is not the case, and that we will see more imports allowed for the teapot refineries, which should in turn allow anode grade petcoke supply to improve.
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