In 2018, China first batch of refined oil export quotas for processing trade were cut sharply by 69.68% against the previous year, as the exports by ordinary trade would be the prevailing trend.

    The first batch of exports quotas for refined oil processing trade are 3.76 million mt, of which jet fuel takes a majority of the total quotas, increasing by 2% YoY, but the gasoline and diesel quotas only settled at 0.2 million mt, slumping 98% YoY.

    While, the exports quotas for ordinary trade totaled 16.24 million mt, making up 81.2% of the total export quotas, and the total quotas for ordinary trade and processing trade gained 0.7 million mt against the first batch of 2017 to recover to the historical peak in 2016.

    In terms of the proportion of the above quotas, China would further encourage the enterprises to export refined oil by ordinary trade, which is more convenient and limited cost incremental against processing trade. In addition, before 2017, domestic refined oil were exported by processing trade, but since the end of 2016, China government recovered the refund of value-added tax for export by ordinary trade, which was welcome among the exporters.

    As in 2018, China overall refining capacity has broken through 800 million mt/yr, the oversupply of the refined oil is serious increasingly, so exporting more refined oil is still an effective method to remit the domestic resources pressure. Meanwhile, considering the newly-constructed refining & chemical projects are all located in the coastal ports, convenience on importing feeds and exporting refined oil shows incomparable geographical advantages against the inland enterprises.

     Since 2017, China refined oil export policies were more stricter, as the export quotas of independent refineries were canceled, the quotas for processing trades were also slashed and meanwhile the overall process for distributing the quotas also slowed down. Through 2017, as the refined oil export progress was relatively rapid, in the first three quarters the export quotas had been used above 80%, so the government again distributed the fifth batch of exports quotas for ordinary trade in order to ensure the refined oil can be exported formally.