Insight
Unravelling the mystery of China's mixed aromatics imports
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Report summary
On 1 May 2018, the Chinese government is launching a new tax system that could have crucial implications for the country's gasoline domestic supply and exports. Specifically, this tax reform is aimed at plugging the current loophole in which imports of reformate – a key gasoline blending component – are classified as mixed aromatics to avoid paying consumption tax. The loophole reportedly costs China an annual US$3 billion loss in taxes, but just how strictly will the government enforce this tax reform? And what impact will it have on China's gasoline exports in the near term?
Table of contents
- What is the new taxation system and why has it been introduced?
- Sources of mixed aromatics into China
- Destination of mixed aromatics into China by region
- How does imported mixed aromatics fit into China’s fuel value chain?
- Cost-build up of mixed aromatics to final gasoline blend – Comparision with wholesale price
- Challenges of full enforcement of this new taxations system
- Short-term outlook for China gasoline exports for three scenarios
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