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Insight | Time: Mar 20 2020 1:40PM
Impact of export tax rebate adjustment on styrene processing trade
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China will increase export tax rebates on almost 1,500 products from March 20, the finance ministry said on Tuesday, as the government looks to ease the pressure on companies hit hard by the coronavirus outbreak. The Ministry of Finance said 1,084 products, would have the rebate raised to 13%, while another 380 products will see the rebate rise to 9%. It did not specify the previous rebate rates. The rebate of styrene monomer and ethylbenzene would be raised from 10% to 13%. The rebate of ABS, PS and EPS would be raised from 9% to 13%.

In terms of China's styrene international trade in the part years, ordinary trade-import took a dominate role and import for processing trade took a small share. Origins for ordinary trade were mainly Saudi Arabia, Taiwan Prov., Japan, Singapore, and a few European countries, for processing trade are mainly South Korea and the United States.

China's styrene capacity grows rapidly in the recent years, particularly since 2019 with the startups of Zhejiang Petroleum & Chemical and Hengli Petrochemical. Import dependency decreased to around 28% from 44% in 2012. Import volume was little changed between 3 and 4 million tons per year.

East China is the major destination of China's styrene import with its proportion maintaining around 85-90%. And import dependency of East China is around 45-50%.

In 2019, China's styrene import totaled around 3.26 million tons. Among that, 2.52 million tons are in terms of ordinary trade, 262kt entrepot trade by bonded area and 254kt processing trade.

The adjustment has limited impact on ordinary trade, but may affect processing trade. China has high anti-dumping duties for styrene import originating from South Korea, Taiwan Prov., and the United States. Under such circumstance, Chinese buyers, particularly EPS and UPR plants, import styrene from the three origins for processing trade for re-export finished products, without paying the anti-dumping duty. After the export tax rebate rise, major plants could also use China-made bonded cargoes or domestic styrene as alternatives to produce finished products for exports. Imports from South Korea, Taiwan Prov. and the United States may decrease.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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