Consumption tax on LCO higher than gasoil
Too late to boost imports by deadline
Dampen demand for Venezuelan, Iranian crudes
Singapore — China's finance ministry said May 14 imports of mixed aromatics, light cycle oil and bitumen blend will be subject to consumption tax from June 12, in a move that took market participants by surprise and which is expected to see imports of the products dry up in the short term.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowDomestic refineries are also expected to cut their gasoline and gasoil exports to ensure domestic supplies, market sources said.
Imports of mixed aromatics, used as a component of gasoline, and LCO, which is used to blend gasoil, will be subject o consumption tax at the same rate as naphtha, at Yuan 1.52/liter or $37.53/b, according to the ministry.
Bitumen blend, which independent refineries use as feedstock, will be taxed at the same rate as fuel oil, at Yuan 1.2/liter or $189.17/mt.
Imports of these products are consequently expected to fall significantly from about 1.5 million mt/month for LCO, 600,000 mt/month for mixed aromatics and 1.78 million mt/month for bitumen blend currently, sources said.
The introduction of a consumption tax on these products had been mooted for years -- with talk in the market earlier in the year that it could come in at the start of May. However, the sudden introduction now shocked some market participants.
"Nothing happened on May 1 while LCO prices recovered slightly this week, we thought business would continue. But now it [the business] is over," a Shanghai-based LCO importer said.
"At this moment, we don't have an action plan yet, and it is too late to order more cargoes to import by the deadline, which is also very risky," a Guangzhou-based importer said. "[Market participants] may find some other ways to get around it later, such as renaming the products and finding other tax-free Harmonized System (HS) codes, but not now."
Sun Jianan, an analyst with S&P Global Platts Analytics, noted that the consumption tax on LCO will be Yuan 0.3/liter higher than for gasoil, which will make it less competitive.
LCO is typically offered at a premium to Means of Platts Singapore 10 ppm gasoil on FOB South Korea basis. South Korea supplied 2.89 million mt of LCO to China in Q1, accounting for 63% of the country's imports, according to General Administration of Customs data.
Meanwhile, the reduction in imports of blending materials is expected to result in Chinese refineries cutting exports of gasoline and gasoil. China exported 5.1 million mt of gasoline and 6.25 million mt of gasoil in Q1, according to GAC data.
In addition, demand for heavy Venezuelan and Iranian crude oils will be dampened due to the higher tax on bitumen blend. Such crudes are usually declared as bitumen blend to the customs when they are imported into China for private refineries in Shandong and Liaoning provinces, market sources said.
"aromatic" - Google News
May 14, 2021 at 04:49PM
https://ift.tt/2Qg7sLy
Beijing to levy consumption tax on imported mixed aromatics, light cycle oil, bitumen blend from June 12 - S&P Global
"aromatic" - Google News
https://ift.tt/2A2dLdj
https://ift.tt/3b8aPsv
Bagikan Berita Ini
0 Response to "Beijing to levy consumption tax on imported mixed aromatics, light cycle oil, bitumen blend from June 12 - S&P Global"
Post a Comment