Sources: China fuel oil imports expected to slow

China is planning tax changes that will raise the cost of fuel oil imports, prompting independent refiners to cut purchases, in a fresh shock to the sector amid thin margins due to weak demand, sources said.

According to Reuters, the changes to the size of the consumption tax rebate that refiners receive once they sell gasoline and diesel refined from imported fuel oil are widely expected to take effect from October, according to multiple industry sources. The decision will boost state revenues but raise costs for importers.

“The tax revision will raise the cost of the input material by about 400 yuan ($57) per tonne, which could prompt many small plants that use fuel oil as a raw material to halt production or even close,” said one of the sources, a trade official at an independent refinery.

He added that his company received verbal notice of the revision from tax authorities earlier this month.