China’s private refiners suspend bitumen blend imports amid new consumption tax: sources


China’s independent refineries and trading companies have suspended imports of bitumen blend, amid the new consumption tax that came into effect on June 12 and a rise in inflow to the all-time-high of 4.16 million mt in May, market sources told S&P Global Platts on June 23.

“Most [incoming] cargoes have rushed to be offloaded in the first half of June, and no new cargoes [have arrived] since then,” said a port source in Qingdao of eastern Shandong province, home to the country’s independent refineries.

Around 1.4-1.5 million mt of Bitumen Blend was imported until around June 12 into Qingdao port, compared with around 1.2 million mt in all of May, according to the source.

“Some of the Bitumen Blend cargoes had to be diverted to other ports for discharge due to the long queue,” the source added.

In addition, sources said that at least 3 million mt of bitumen blend would have been discharged nationwide over the first half of June, indicating that China’s imports remained high despite strong import levels in April and May.

China-based buyers were rushing to bring in as much bitumen blend as possible before June 12, when a new consumption tax of Yuan 1,218/mt ($187.92) before 13% value-added tax on bitumen blend imports became effective.

However, “it is not likely for those trading companies and independent refineries to import bitumen blend for a while, unless the crack is strong enough to cover the higher tax costs,” said an oil analyst.

May imports rise 73% on month

China’s bitumen blend imports rose 72.5% on the month to a new high 4.16 million mt in May from a four-month high of 2.41 million mt in April, data from the General Administration of Customs showed on June 21. The previous recorded high was 2.49 million mt in December, the GAC data showed.

About 89% of the total imports, or 3.7 million mt, was supplied by Malaysia. The country’s exports to China rose 91.7% from 1.93 million mt in April.

About 3 million mt, or 73.4% of China’s total bitumen blend imports in May, were received by Shandong companies, including independent refineries and trading companies registered in the Shandong province, the GAC data showed.

January-May inflow rises 364% on year

Over the first five months of the year, China imported 11 million mt of Bitumen Blend, up 364% from a low base of 2.56 million mt in 2020.

About 74.9%, or 8.9 million mt, of those were imported by Shandong companies, the GAC data showed.

This was followed by Zhejiang companies, with 894,750 mt in imports, or 7.5% of the total.

Over January-May 2020, the importers were relatively scattered, with Shandong companies accounting for the highest share of 33.8%. Companies registered in Shanghai and Zhejiang province accounted for around 23.1% and 15.1% of the imports, respectively.

Bitumen blend is typically crude cargoes blended off Malaysia waters with heavy grades, mostly Venezuelan Merey in recent years, which are used as feedstock to produce asphalt for paving roads.

Independent refineries, especially those in Shandong province, are the major buyers of bitumen blend as the barrels are consumption tax free and refiners are not required to use crude import quota when bringing in the cargoes.
Source: Platts





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