Asian solvent-grade mixed xylenes prices surged $22/mt week on week to a 53-month high of $1,260/mt CFR China Friday on firm demand and low inventory in China over the past three weeks, according to Platts data.
The last time the marker was any higher was on June 13, 2008, when it touched $1,265/mt CFR China, which is its historic high.
The introduction of tighter rules for fuel oil consumption tax from next year has prompted buyers in China to stock up ahead of the year end, and led to lower inventories of solvent-MX across the country, traders said Monday.
China's State Administration of Taxation announced end November that it will tighten fuel consumption tax guidelines to clamp down on refineries, traders and other operators who evade paying taxes by declaring taxable oil products under other names.
The tax office said the existing tax for listed oil products -- gasoline, diesel, naphtha, lubricants, jet/kerosene, solvents and fuel oil -- would remain but now added that the taxes would also apply to all oil products matching these products' specifications that are produced from crude oil.
All other oil products that adhere to national oil and petrochemical industry standards and are issued product certificates by the government would not be taxed, it added.
Anything that falls outside this criteria would be taxed according to the rate levied on naphtha, which is Yuan 1 (16 cents)/liter, it said.
As such it remains unclear whether solvent-MX would be included in the list of products on which tax would be levied.
Some buyers were stocking up solvent-MX cargoes amid this uncertainty, a China-based trader said. "The solvent-MX market in China is bullish amid uncertainty about the consumption tax," he said Friday.
