REFINING: China Teapots Cut CDU Capacity in Jan and Feb

At least four independent oil refineries in eastern China with a combined annual processing capacity of 18m tons, or 320kb/d, have halted CDUs in January or plan to in February, according to Reuters sources.

• The halt in operations for indefinite maintenance comes as a cut in tax rebates weighs on independent refiners already struggling with tight margins. 
• Activity at teapots will likely fall further in February but could recover in March on improved feedstock availability and higher seasonal domestic diesel demand, FGE said last week.
• The facilities in Shandong province, include refineries operated by Shandong Shangneng Group, Kelida Petrochemical, Wonfull Petrochemical and China Overseas Energy Technology (Shandong), the sources added.
• The companies do not have government-granted crude import quotas but instead rely on straight-run fuel oil or bitumen blend feedstock.
• The new tax effectively raised feedstock costs by $33-$83 per ton, or $5- $12.8 per barrel, sources said.