China's refining 2030: optimizing capacity, raising efficiency

China's refining cycle has pivoted from building capacity to optimizing it. Replacement builds inside national petrochemical bases are raising the quality of the operating refineries, while policy is steadily retiring units that fail current quota and compliance requirements or face sourcing constraints. Refinery runs are therefore determined by configuration and compliance rather than headline Crude Distillation Unit (CDU), with retail-tax execution and feedstock oversight now the key factors shaping refinery profit margins.

 

Approvals have shifted from greenfield growth toward upgrades and "large replacing small" inside national petrochemical bases. Incremental additions concentrate in integrated complexes, while inefficient units - primarily among independents - exit under policy discipline and demand realignment. Since most of the phased-out units were operating far below their designed capacity, their removal raises the overall efficiency of the fleet instead of cutting national throughput proportionally. The production capacity envelope into 2030 is capped, with composition skewed more integrated, more compliant, and easier to schedule.

 

 

Integrated state-owned and leading private complexes sustain structurally higher and steadier operations, supported by feedstock security and value-chain synergies. Independents operate within quota, sourcing and compliance constraints. As high-efficiency units scale and legacy sites wind down, the national refining operating rate is expected to stabilize toward the upper end of its historical range by the end of the decade.

 

 

By structure, majors hold the larger share of national CDU and anchor national runs, while large private integrated hubs form the second pillar. Tighter quota control, higher substitute-feedstock costs, and limited export licenses are pushing traditional independents to retrench. Independents' lower run rates and thinner profit margins reflect the erosion of discounted-barrel advantages and a slate tilted to gasoline and diesel.

The forward balance is a more concentrated map: majors expand share, leading private complexes pivot further into olefins and specialty chains, and sub-scale independents face attrition rather than growth.

 

 

The retail-end consumption-tax shift, stricter deduction rules for substitute feedstocks, and refined-product export rebate adjustments reprice costs and compress discounts along the chain. Retail profit margins historically favored gasoline over diesel at key intervals, but discount-driven buffers narrow as digital oversight strengthens.

Feedstock oversight and deduction rules lift effective costs for plants reliant on fuel oil or bitumen feedstocks, accelerating rationalization in regions where compliance is weakest. As export opportunities become increasingly dependent on license availability and policy windows, refinery margin cycles are moving more in step with policy timing. The net effect is higher compliance, narrower discounting, and faster exit of marginal production capacity - while scale, traceability, and trace depth remain durable advantages.