September 22, 2022

2021 Overview of China’s Market Fuel Quality

Stratas Advisors

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China’s strict COVID-zero approach in containing the outbreak of COVID-19 cases have a profound effect on its cities and/or provinces where unexpected mass lockdowns and border closures are gradually becoming the norms of today. This potentially affects the scale of fuel quality inspections as well as fuel quality compliance. The overall number and frequency of fuel quality inspections are expected to fluctuate across regions due to the varying prominence of lockdowns in different cities and/or provinces depending on the gravity of the COVID-19 outbreak. As fuel demand increased and/or fell depending on the implementation of lockdowns, importance of ensuring fuel quality compliance may become less of a priority. With this, the level of fuel quality compliance was expected to deteriorate.

Since 2018, the State Administration for Market Regulation (SAMR) and its local bureaus are responsible for carrying out fuel quality inspections in the country. However, unlike its predecessor which is the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), SAMR has yet to publish any consolidated fuel quality monitoring results on a nationwide scale since its establishment. In contrast, the majority of its local bureaus have been releasing fuel quality inspection results annually.

In terms of fuel specifications, Beijing VIB for gasoline (DB11/238-2021) and diesel (DB11/239-2021) has been implemented since Dec. 1, 2021. Currently, China VIA specifications (GB 17930-2016) and China VI specifications (GB 19147-2016) are in force for gasoline and diesel respectively. Overall, fuel specifications were in force for a total of four grades of gasoline and six grades of on-road diesel in 2021.

As mentioned previously, not all regions in China are tested equally for fuel quality. Some regions reported extensive fuel quality testing with more than 3,000 samples tested (e.g. Guangdong province), while some regions reported the results of fewer than 100 samples (i.e. cities of Beijing and Chongqing, and provinces of Guangxi, Hebei, Heilongjiang and the autonomous region of Tibet). The map below shows the overall number of fuel samples tested by region in 2021. As shown in the map, most regions reported the results of 100-499 fuel samples. Notably, more regions reported less than 100 samples in 2021 compared to 2020. Since Stratas Advisors’ 2015 report on China’s market fuel qualityShandong was one of the regions with the most extensive fuel quality testing regimes and reporting in China and joining the rank in 2021 were Guangdong, Liaoning and Shanxi.

Overview of Fuel Sampling Quantity by Region in 2021

Source: Stratas Advisors, September 2022

In terms of the overall fuel quality compliance rate, 2021 witnessed a deterioration of 1.1% to 96.7% from 97.8% in 2020. This is due to a significant increase of 3.4% in the non-compliance rate of E10 samples, from 7.7% in 2020 to 11.1% in 2021. Coverage of fuel quality inspections during 2021 was less detailed compared to previous years. A significant number of cities and/or provinces did not report their overall fuel quality compliance rate due to insufficient fuel sampling data. However, Stratas Advisors observed that bureaus of various counties reported their overall fuel quality compliance rates (see map below).

Overview of Overall Fuel Quality Compliance Rates in China by Region, 2021

Source: Stratas Advisors, September 2022

A notable difference in fuel quality sampling of 2021 compared to 2020 would be the lack of information on fuel types such as gasoline blendstock for E10, fuel ethanol, and automotive CNG. There is an increasing trend where administrations or bureaus of cities, provinces and counties only report the total number of samples tested without specifying the fuel type they correspond to, as well as the number of compliant or non-compliant samples. For example, the Jiangsu Administration for Market Regulation reported testing for a total of 297 compliant samples for gasoline and E10 in 2021 without specific reference to the fuel type the number corresponds to. On the other hand, the Shanghai Institute of Quality Supervision and Inspection Technology reported the total number of samples tested without highlighting the number of compliant and/or non-compliant samples.

Overall, while frequency of fuel quality sampling and testing across regions had increased, with sampling results made available in 2021 in provinces of Anhui, Gansu, and Heilongjiang that were previously unavailable in 2020, results of fuel quality testing have been reported less meticulously. In a number of cities and/or provinces, e.g. Shanghai, the total number of samples tested in 2021 was significantly lesser than in 2020, i.e. 150 vs 420, though the city did not face border containment or lockdown(s) in 2021. Information such as off-spec parameters, compliant and/or non-compliant samples were absent from a notable number of reports. Thus, results of fuel quality sampling and testing were relatively unclear in 2021 as compared to prior years.

The full report is an update to Insights, June 17, 2021 and provides an overview of China’s 2021 fuel quality monitoring system and market fuel quality through the consolidation of fuel quality monitoring data for the following fuels:

  • Gasoline and gasoline blendstock for E10;
  • E10 and fuel ethanol;
  • On-road diesel and B5; and
  • CNG for automotive use.

Market fuel quality data is not available for other fuels such as fuel methanol, M15, higher methanol blends such as M30, M45, etc., biodiesel B100 and LPG.

 


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