company logo

China introduces levy on biodiesel imports

March 11, 2014

At the beginning of the year, China began levying a consumption tax on imported biodiesel and some types of kerosene, a customs official said, a move aimed at curbing imports of the fuel that have taken the market share from state refiners, Reuters reported in January.

At the beginning of the year, China began levying a consumption tax on imported biodiesel and some types of kerosene, a customs official said, a move aimed at curbing imports of the fuel that have taken the market share from state refiners, Reuters reported in January. The tax could create a supply gap for diesel in the world’s second largest oil consumer that would force state refiners to scale back exports. That would support Asian processing margins, which have recently been boosted by a refinery outage in Taiwan.

The government imposed a consumption tax of 0.8 yuan (US$0.13)/litre on biodiesel, lamp kerosene and other kerosene grades, Chinese customs said on its website.
Biodiesel imports, mostly by private companies, surged to an estimated 1.7M tonnes in 2013 on tax and trade incentives. But some shipments contain a far lower biofuel component than required by China, according to sources.

As a result, imported biodiesel displaced local diesel sales, prompting state refiners Sinopec Corp and PetroChina to boost diesel exports to record highs last year.
Small refiners and independent fuel dealers in late 2010 imported power kerosene, a blend not subject to consumption taxes and one that could be easily turned into diesel. The practice eventually led to detention and fines for two traders.

In December, Platts reported that the yuan 941 (US$155)/tonne consumption tax, once added to the value of the fuel, would lead to a corresponding yuan 160 (US$26)/tonne rise in the value-added tax (VAT) payable on it, which is levied at a rate of 17% of the product value. That implies a total of yuan 1,101 (US$181)/tonne in additional costs on the imported biodiesel blend.
China imported 94,673 tonnes of biodiesel in the first 10 months of 2013, up more than six times from the same period in 2012. However, volumes remain limited because of high import costs, which currently exceed yuan 8,000 (US$1,321)/tonne.

“Sometimes it can go higher than yuan 13,000 (US$2,147)/tonne, depending on the quality and the proportion of biodiesel content,” said an importer. “This grade of biodiesel is seldom used as fuel due to the high prices. We import them for producing chemical products.”


Related News