Chinese trading houses import bitumen blend due to shortage on crude quotas
Quantum Commodity Intelligence – China's independent refineries are being forced to cut crude imports due to the shortage of crude quotas, leading to a rise in feedstocks that fall under the category of bitumen blend, despite a new consumption tax on the product, reported S&P Global Platts.
The first feedstock cargo to be subject to the Yuan 1,218/mt ($188/mt) consumption tax, imposed from June 12 onward, arrived at Yantai Port in Shandong province in the week ended July 10. A Shanghai-based trading company took the 140,000 mt cargo, according to the report.
Bitumen blend typically refers to crude cargoes blended off Malaysian waters with heavy crude grades, particularly Venezuelan Merey, while Iranian crudes have also been used in 2021.
The Shanghai-based trading house has paid more than Yuan 250 million ($38.62 million) in import, consumption and value-added taxes for the cargo.
On top of the existing 8% import tax, the consumption tax adds Yuan 1,376.34/mt ($212.59/mt) to the cost of bitumen blend imports after VAT.
In comparison, crude oil is free from import and consumption taxes, and consumption taxes on oil products are only payable when selling products.
The Chinese government has, however, slashed crude import quotas awarded to independent refiners by around 35% compared to the same tranche awarded last year,
The bitumen blend price fell to as low ICE Brent minus $5/b after mid-May, when Beijing announced the new tax, but values have since rallied to as high as ICE Brent plus $1/b recently as refiners scramble for feedstock.
