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OIL PRODUCTS: China’s Teapots Face Feedstock Shortage amid Tax Change: Platts

OIL PRODUCTS
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China’s independent refineries in Shandong ae bracing for a potential feedstock shortage in Q4, as they near the end of their crude import quota utilisation and face higher cost of alternative feedstocks, Platts said.

  • This is due to a change in consumption tax regulations being planned by Beijing.
  • The refineries have a combined capacity of 3.4m b/d, around 18% of China’s total capacity.
  • Starting Oct. 1, Beijing will likely alter the consumption tax regulation on fuel oil and bitumen blends.
  • Consequently, Teapots will need to bear a higher tax burden which will hit their profit margins, especially for refineries without crude import quotas remaining.
  • Those without crude quotas face a severe feedstock shortage if the economics for alternatives deteriorate.
  • There could be a shortfall of around 5.5m mt of quotas for the remainder of 2024.
  • Platts said that the government may allocate some of the 2025 quotas early this year.
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China’s independent refineries in Shandong ae bracing for a potential feedstock shortage in Q4, as they near the end of their crude import quota utilisation and face higher cost of alternative feedstocks, Platts said.

  • This is due to a change in consumption tax regulations being planned by Beijing.
  • The refineries have a combined capacity of 3.4m b/d, around 18% of China’s total capacity.
  • Starting Oct. 1, Beijing will likely alter the consumption tax regulation on fuel oil and bitumen blends.
  • Consequently, Teapots will need to bear a higher tax burden which will hit their profit margins, especially for refineries without crude import quotas remaining.
  • Those without crude quotas face a severe feedstock shortage if the economics for alternatives deteriorate.
  • There could be a shortfall of around 5.5m mt of quotas for the remainder of 2024.
  • Platts said that the government may allocate some of the 2025 quotas early this year.