China will re-introduce an import tax on diesel -- at 1% -- from January 1, 2014, following approval from the State Council, the country's Ministry of Finance said Monday.
No reason was given for the change.
Diesel had been exempt from import duty since July 1, 2011, when the government removed a 6% tariff on the oil product to encourage imports, improve foreign trade balances and ensure the smooth operation of the domestic economy.
The 1% tariff on diesel will result in around a Yuan 50-60/mt ($8.18-9.82/mt) increase in the import cost, taking into account benchmark Singapore gasoil prices and a freight cost to China, said a Chinaoil trader based in Beijing.
At the Asian close Monday, Platts assessed the benchmark FOB Singapore 500 ppm sulfur gasoil as $124.64/barrel.
"Re-levying the tariff on diesel would be perceived to encourage the export of gasoil rather than import, as the domestic production will probably satisfy the demand with the refinery expansion in China," said a source with an independent oil trading company based in Guangzhou.
China imported 2.44 million mt of light gasoil in 2011, amid strong domestic demand, and 947,143 mt in 2012. In the first ten months of this year, however, imports of the grade slumped 66% year on year to 263,503 mt.
Only state-owned PetroChina, Sinopec, CNOOC, SinoChem and Zhenrong are allowed to import diesel into China.
