Sunday, September 7, 2025
  • Login
Forbes 40under40
  • Home
  • Technology
  • Innovation
  • Real Estate
  • Leadership
  • Money
  • Lifestyle
No Result
View All Result
  • Home
  • Technology
  • Innovation
  • Real Estate
  • Leadership
  • Money
  • Lifestyle
No Result
View All Result
Forbes 40under40
No Result
View All Result
Home Technology

China’s overcapacity drive faces stubborn oil-refiner revival

by Riah Marton
in Technology
China’s overcapacity drive faces stubborn oil-refiner revival
Share on FacebookShare on Twitter


[BEIJING] China’s oil refining sector is once again showing its knack for survival just as Beijing seeks to tackle industrial overcapacity.

Of three small refiners in Shandong province that went bankrupt last year, one has resumed operations under a new owner and the other two are in talks that could see them return, according to sources familiar with the matter. All are seeking crude-import quotas from the central government, they added.

The revival comes as China vows to curb excess capacity across industries such as steel and solar, which has stemmed from factors including export-focused manufacturing and government subsidies. The issue is particularly pertinent to oil refining as the sector grapples with a likely peak in the country’s petrol demand due to the uptake of electric vehicles and slowing diesel growth.

Prior to the bankruptcies in 2024, the three refiners were owned by state-run Sinochem Group. Independent operator Weifang Hongrun Petrochemical acquired Shandong Changyi Petrochemical this year and restarted operations in late June using domestically produced crude, according to traders and analysts who asked not to be identified as the matter is private.

Talks to acquire the other two, Zhenghe Group and Shandong Huaxing Petrochemical Group, are ongoing, the sources said, declining to elaborate on the buyers. They added that the timing of their restart was unclear.

The long-term survival of the three refiners will likely hinge on crude-import quotas from Beijing, giving them access to cheaper oil, such as from Iran, that will help mitigate razor-thin margins. The central government has a long history of trying to consolidate the so-called teapot sector, but local government support and the exploitation of tax loopholes allowed them to thrive.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

“The Shandong teapots have proved incredibly resilient,” said Michal Meidan, the head of China Energy Research at the Oxford Institute for Energy Studies. “Local governments and local financial institutions are heavily invested in the survival of their industries, at least until new growth drivers emerge.”

A Weifang Hongrun representative confirmed the acquisition of Changyi in March and said the refiner is in the process of applying for a quota to import crude, without elaborating. A spokesperson for Changyi confirmed the transaction, but declined to comment on import allocations.

Emails to Sinochem’s press office were unanswered, and nobody from the National Development and Reform Commission, and Ministry of Commerce replied to a fax seeking comment.

‘Questionable’ economics

Changyi is seeking a crude-import quota of as much as 100,000 barrels a day, according to the sources familiar. Collectively, the three oil refiners are asking for an allocation of up to 300,000 barrels a day, but the central government has yet to make a final decision, two of them added.

China imported around 12 million barrels of oil a day in June, with refiners in Shandong taking about 2.5 million barrels a day, according to government data.

The economics are “questionable” but the return of the refiners signals how the local government is finding ways to restart plants, in part due to concerns about regional employment, said Mia Geng, an analyst with industry consultant FGE. BLOOMBERG

Tags: ChinasDriveFacesoilrefinerOvercapacityrevivalStubborn
Riah Marton

Riah Marton

I'm Riah Marton, a dynamic journalist for Forbes40under40. I specialize in profiling emerging leaders and innovators, bringing their stories to life with compelling storytelling and keen analysis. I am dedicated to spotlighting tomorrow's influential figures.

Next Post
Temasek proposes 5-year, 10-year and 30-year tranches of offshore Chinese yuan bonds

Temasek proposes 5-year, 10-year and 30-year tranches of offshore Chinese yuan bonds

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Forbes 40under40 stands as a distinguished platform revered for its commitment to honoring and applauding the remarkable achievements of exceptional individuals who have yet to reach the age of 40. This esteemed initiative serves as a beacon of inspiration, spotlighting trailblazers across various industries and domains, showcasing their innovation, leadership, and impact on a global scale.

 
 
 
 

NEWS

  • Forbes Magazine
  • Technology
  • Innovation
  • Money
  • Leadership
  • Real Estate
  • Lifestyle
Instagram Facebook Youtube

© 2025 Forbes 40under40. All Rights Reserved.

  • About Us
  • Advertise
  • Contact Us
No Result
View All Result
  • Home
  • Technology
  • Innovation
  • Real Estate
  • Leadership
  • Money
  • Lifestyle

© 2024 Forbes 40under40. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In