BEIJING: A new market trend is emerging in the tanker market, as new “players” are joining the demand side. So called “teapot” or “tea kettle” is the collective term for Chinese independent refiners. As shipbroker Charles R. Weber explains in its latest weekly report, “teapots mainly generate gasoline and gasoil/diesel. China’s teapot refineries have a total oil‐ processing capacity of almost 220Mta, or about 4.4Mnbd, which is equivalent to 30% of Chinese total refinery capacity (14Mnbd). While they have no rights to export their refined product output, changes have been made allowing some of them to import their own crude”.
According to CR Weber, “teapots have been regarded as second‐class operations dependent on state petrochemical companies for their feedstock, which typically includes fuel oil and bitumen blend crude oil. As of September 2015, the landscape has started to change with seven refiners granted crude oil import licenses, which will allow them unfettered access to internationally traded crudes – thus potentially reducing costs and raising quality. The driver of this change in policy – which has been rapidly introduced ‐ has been – in part – to widen access to the glut of cheap international crude oil that is currently available. It may also be seen as part of China’s wider policy to reduce the power of large state controlled companies and invigorate the private sector”.