Teapots are the nickname for independent oil refineries in China, the oil refineries are causing an increase in market share, and the slowing economy is rewarding the refineries who have more flexible and adaptable business models, it piles further pressure onto margins for the country’s oil majors who have found themselves to be inflexible and undependable to meet the needs of cheaper alternative oils.

Now accounting for 20% of China’s capacity in oil refining, the teapots are responsible for the growth in imports after Beijing had allowed them new import quotas at the end of last year.

Their competitors are running at higher operating costs and rates and the teapots contribute to a new wave of exports in China’s diesel exports and fuel demands. The success of the teapots comes as a surprise to many after years of attempts by Beijing government limiting the independent refinery companies to crude supplies and restricting their access to bank loans.

The economy slowed and the teapots’ lower costs in operating allows China to stay supplied with alternatives to expensive fuels, cushioning a lot of the impact to the economic growth in the industry and relating industries.

Russian crude has been routinely and regularly purchased by teapot companies that the Chinese border had to undertake an upgrade to accommodate them. The oil industry is undertaking some major changes with some teapot refineries, sixteen of the teapot refineries such as Dongming have formed an oil coalition for importing oil, making purchases of spot crude from places in the Americas and Middle East. Dongming is potentially going one step further than its competitors by looking at singing an annual agreement with industry giant BP.

With growing cash flow and confidence many teapots have announced plans to refineries in other areas in Asia later this year including Malaysia and the Indian Ocean coast.