China plans to impose taxes on oil by-products

MOSCOW (MRC) -- China plans to impose consumption taxes on oil by-products such as mixed aromatics, light cycle oil and bitumen blend, tightening regulations on a fuel import market worth millions of dollars, reported Reuters.

The proposed taxes of more than USD145.01 per ton for the oil products could start in May, four sources with knowledge of the matter said, declining to be identified as they are not authorized to speak with media.

The taxes will effectively close a loophole often used by oil traders in China and will shut the door on nearly 20 MMt of imports of these products and improve sales of fuel produced locally, they said.

Outside of China, the policy change will have a ripple effect across trading companies and refineries in Asia and Europe which have relied on the world's second-largest oil consumer as a key outlet for such products.

"If taxes are imposed, I think this market will be dead," said a South Korean refining source who declined to be named due to company policy.

A consumption tax of 1,400 yuan per ton could be levied for light cycle oil (LCO), a refinery by-product that is consumed in China as low-grade diesel, two of the sources said.

Importers of mixed aromatics, petrochemical products such as benzene, toluene and mixed xylenes that are blended with gasoline to boost octane levels, may have to pay 2,100 yuan per ton as a consumption tax, similar to that levied for gasoline.

Bitumen blend, a popular feedstock choice among independent refiners, could see a 1,200 per ton tax levied on imports. The residue is often processed in crude distillation units or in upgrading units such as cokers to produce higher value fuels.

The Ministry of Finance did not respond to Reuters' request for comment.

In a proposal from state-owned refiner Sinopec to the Chinese government to tighten the tax scrutiny on LCO, a company executive cited customs data for LCO imports at 3.22 MMt from January to September 2016, up 194% on year.

This works out to an average of about 350,000 t a month.

This has risen to 600,000 t a month by March of this year after the lucrative trade attracted cargoes from the west, two traders familiar with the market said.

As MRC informed before, Japan is considering removing China from its list of Generalized System of Preferences or GSP countries due to China's economic strength. Under GSP rules, developing countries are taxed at a lower rate when exporting their products to developed countries. Japan's import tax on PET imports from China currently set at zero could be affected by any change.
MRC

MOSCOW (MRC) -- ExxonMobil successfully completed the heavy lift of its vacuum fractionation tower for the hydrocracker at its Rotterdam refinery this April, said Hydrocarbonprocessing.

About 50 m long and, with added platforms, 11 m wide, the vacuum fractionation tower is the largest piece of equipment placed on the foundation intact. The tower is designed to separate products under reduced pressure so less energy is needed.

The tower was delivered to the refinery in October 2016. Upon arrival of the tower at a “laydown” yard, pre-dressing of the tower began. This allowed the platforms, insulation, 13 t of piping, 2 km of cable and instrumentation to be installed.

The final dressed tower weighs about 400 t -- roughly comparable with a fully loaded Boeing 747 plane. The tandem lift operation lifted the vacuum fractionator from horizontal to vertical position and then a crawler crane lifted the tower over a nearly 30 m tall pre-cast concrete table-top foundation to place it in position.

This milestone was preceded by the lift of the three reactors, which took place Feb. 21–25.

Once the hydrocracker expansion project is complete, the Rotterdam refinery will produce ExxonMobil’s EHCTM Group II base stocks in Europe for the first time. Production start-up is on track for late 2018.

As MRC informed earlier, ExxonMobil is in talks to buy a refining-petrochemical complex in Singapore that could boost its fuel and chemical production in Asia.
MRC

MOSCOW (MRC) -- ChemChina won conditional EU antitrust approval on Wednesday for its USD43 billion bid for Swiss pesticides and seeds group Syngenta, a deal that could help China boost its domestic agricultural output, said Reuters.

The deal is one of several reshaping the agricultural chemicals and seeds market, even as these deals trigger fears among some farmers that bigger, more powerful suppliers could be better placed to push up prices and economize on developing new herbicides and pesticides.

Reuters reported on Feb. 2 that the deal, the largest foreign acquisition by a Chinese company, would be cleared with conditions. The European Commission said planned asset sales would address its competition concerns.

"It is important for European farmers and ultimately consumers that there will be effective competition in pesticide markets, also after ChemChina's acquisition of Syngenta," European Competition Commissioner Margrethe Vestager said in a statement. Syngenta shares were trading up 1.1 percent after the clearance was announced.

ChemChina will sell a large chunk of its subsidiary Adama's pesticide, herbicides and insecticides business, its seed treatment products for cereals and sugar beet and a substantial part of its plant growth regulator business for cereals.

American Vanguard said it struck a deal with Adama to acquire three crop protection product lines, without disclosing financial terms.

Bernstein Research analyst Jeremy Redenius said that since Adama focuses on established crop chemicals that have lost patent protection, potential buyers of other assets would likely be from the same industry segment, such as FMC Corp (FMC.N), Nufarm (NUF.AX) and Sumitomo Chemical (4005.T).

Redenius added that BASF (BASFn.DE) was unlikely to bid due to its focus on patented substances. BASF and FMC declined to comment. Australia's Nufarm and Japan's Sumitomo were not immediately available for comment outside regular business hours.

Syngenta said the EU's go-ahead was a major step toward closing the transaction, expected in the second quarter of 2017.

Some of Syngenta's pesticides will also be put on the block. The world No. 1 pesticides maker sells its products in more than 90 countries under such brand names as Acuron, Axial, Beacon and Callisto. It sells seeds such as cereals, corn, rice, soybeans and vegetables. U.S. antitrust authorities nodded the deal through on Tuesday on condition ChemChina divests three products.

The EU approval came a week after it cleared the USD130 billion Dow Chemical (DOW.N) and DuPont (DD.N) merger in return for hefty asset sales, including global research and development facilities.
MRC

MOSCOW (MRC) -- Alpek, S.A.B. de C.V. has announced that it obtained all necessary corporate approvals to acquire 100% of PetroquimicaSuape and Citepe from Petrobras for USD385 MM, as per Hydrocarbonprocessing.

This amount is payable on the closing date for the two companies on a debt-free basis, and is subject to adjustments in working capital, among others.

The closing of this transaction is still dependent on several conditions precedent, including approval by the Administrative Council for Economic Defense (CADE) in Brazil.

On March 27, Petrobras announced that its Shareholders’ Extraordinary General Meeting approved the sale of PetroquimicaSuape and Citepe to Alpek.

Petroquimica Suape and Citepe operate an integrated PTA-PET facility in Ipojuca, Pernambuco, Brazil with an installed capacity of 640 Mtpy and 450 Mtpy PTA and PET, respectively. Citepe also operates a 90 Mtpy texturized polyester filament plant on site.

As MRC wrote before, in late December 2016m, Petrobras said its board had approved the sale of two petrochemical companies, Petroquimica Suape and Citepe, to Mexico's Alpek SAB de CV for USD385 million.

Headquartered in Rio de Janeiro, Petrobras is an integrated energy firm. Petrobras' activities include exploration, exploitation and production of oil from reservoir wells, shale and other rocks as well as refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

Alpek is the petrochemicals unit of Mexican conglomerate Alfa.
MRC

MOSCOW (MRC) -- ExxonMobil said on Wednesday it is in talks to buy a refining-petrochemical complex in Singapore that could boost its fuel and chemical production in Asia, said Reuters.

"We can confirm that we are currently negotiating with the receiver for Jurong Aromatics Corporation Pte Ltd to acquire JAC's assets on Jurong Island," an ExxonMobil spokeswoman said.

"While progress is being made, no agreement has been reached yet," she said. The US oil company is the frontrunner to buy JAC which went into receivership in September 2015, Thomson Reuters publication Project Finance International reported.

Borelli Walsh had been appointed the receivers and managers of JAC by lender BNP Paribas. Lotte Chemical Corp said in March that it had dropped out of the race to buy JAC.

Costing $2.4 B, JAC's condensate splitter and petrochemical units started operations in Asia in 2014 to produce paraxylene, a raw material for textiles and bottles, to meet China's demand.

Singapore is already ExxonMobil's biggest paraxylene production base in the world at 1 MMtpy, according to its 2016 annual report. The proposed JAC acquisition will boost ExxonMobil's paraxylene capacity to 1.8 MMtpy and add another 2.5 MMtpy of oil products output.

JAC's debt problems mounted amid the global commodities rout and it stopped operations at the end of 2014 to fix a technical issue. The plant was restarted in July 2016 under tolling agreements with BP and Glencore.

Once the deal is inked, ExxonMobil could take over the purchase of condensate for JAC from July, trade sources said.
MRC