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Follow on Google News | Changes to China's Tax Treatment of Fuel Oil Shakes Up Bunker MarketIMO 2020 leads to important changes in the bunker, fuel oil, and refining sectors in China that could bring about tax changes as China eyes new opportunity
By: ESAI Energy The report looks at changes happening in the bunker, fuel oil, and refining sectors that make China a special case regarding both on-spec fuel availability and enforcement. China produces very little fuel oil given its enormous refining sector, and the fuel oil that is produced is locked inside the country due to consumption and value-added taxes. While refiners receive rebates to compensate for these taxes for exporting gasoil, gasoline, and other light products, they do not for fuel oil. This could change very soon however with China seeing the IMO sulfur cap as an important opportunity for their refiners. This would have significant implications for Asia's supply of compliant bunker and global trade flows. As each province independently prepares for IMO changes by purchasing technologies and training inspectors, inspection rates will remain low. This is one reason why China's compliance has a moderate forecast of 83 percent. The report also looks closely at the experience of Zhoushan, and whether the port's success can be quickly replicated elsewhere in China. "Zhoushan has been promoted to compete with Singapore, but its bunker sales have grown mainly by taking market share from other Chinese ports, thanks to its relative advantages, including preferential policies and reforms in the bunkering procedure," explains ESAI Energy analyst Yao Wu. "China's potential to become a regional bunkering hub not only depends on the upcoming tax refund, but also on other factors, such as the extent to which it can duplicate Zhoushan's success elsewhere. The IMO specification change presents opportunities across the global oil markets, but especially in China." Request a copy of the report here. (https://info.esaienergy.com/ End
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