China on May 14 announced that it will implement a consumption tax on mixed aromatics, light cycle oil and bitumen blend from June 12 in an effort to close a loophole in its tax system. This tax is expected to have repercussions not only in the domestic market, but also in the regional refined products market and crude markets.
Mixed aromatics and light cycle oil or LCO are used as blend stocks in gasoline and gasoil, and bitumen blend is used as a feedstock by independent refiners.
S&P Global Platts oil market editors and analysts Mriganka Jaipuriyar, Grace Lee, Oceana Zhou and Su Yeen Cheong examine how the tax is expected to alter domestic supply-demand balances, regional trade flows, and types of crudes imported into China.
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