The State Administration of Taxation announced on the 26th the "Naphtha Consumption Tax Exemption Management Measures." According to the management measures, naphtha imports and domestic naphtha used as raw materials for ethylene and aromatics products are exempted from consumption tax. This move will stimulate the domestic refinery import naphtha to supplement the domestic resource gap, which will help ease the increasingly serious shortage of raw materials in China's ethylene industry. It is the nation that prepares in advance for the possible shortage of naphtha.
According to statistics from related departments, with the completion and expansion of a large number of ethylene projects in the country in the next few years, China will import 1.58 million tons of naphtha in 2008, exceeding exports by about 130,000 tons. Following the shortage of crude oil, China will become a net importer from a net exporter of naphtha.
The “Administrative Measures†stipulates that naphtha production enterprises (hereinafter referred to as “sales partiesâ€) sell to naphtha and aromatic hydrocarbons production enterprises (hereinafter referred to as purchasers) as naphthas for the production of raw materials for ethylene and aromatic hydrocarbons, and implement “stonesâ€. The "Manual for the use of brain oil" (hereinafter referred to as "certificate sheet") management. The “certificate†is used by the purchaser to obtain the naphtha consumption tax from the competent tax authorities before purchasing the goods. If the sales party sells its naphtha directly to units and individuals other than ethylene and aromatics production enterprises, it will not apply the "certificate sheet" for management and should report and pay the consumption tax in accordance with the regulations.
According to sources from the industry, with the completion or expansion of certain ethylene projects of the two companies before 2010, the demand for naphtha will increase accordingly, while the output will not keep pace with demand. These projects include Zhenhai ethylene project of 1 million tons, Fujian ethylene project of 800,000 tons/year, Guangzhou Petrochemical ethylene expansion capacity of 590,000 tons/year, and Tianjin Petrochemical ethylene expansion capacity of 1 million tons/year.
In the past 2007, due to shortage of raw materials, ethylene prices rose from 8,000 yuan / ton to more than 9,000 yuan / ton, domestic detergent, plastic products and other downstream industries can only have prices or closed down.
Experts stated that the exemption of the consumption tax for the production of raw materials for ethylene and aromatics products directly reduces the production cost of ethylene and will obviously benefit the ethylene projects of the refineries of PetroChina and Sinopec. At the same time, it also reduced the manufacturing costs of ethylene and downstream plastic rubber, and promoted the development of the organic chemical industry. It is expected that this adjustment will have a positive impact on PetroChina's earnings of around 600 million, while Sinopec’s positive earnings impact will be around 1.4 billion.
According to statistics from related departments, with the completion and expansion of a large number of ethylene projects in the country in the next few years, China will import 1.58 million tons of naphtha in 2008, exceeding exports by about 130,000 tons. Following the shortage of crude oil, China will become a net importer from a net exporter of naphtha.
The “Administrative Measures†stipulates that naphtha production enterprises (hereinafter referred to as “sales partiesâ€) sell to naphtha and aromatic hydrocarbons production enterprises (hereinafter referred to as purchasers) as naphthas for the production of raw materials for ethylene and aromatic hydrocarbons, and implement “stonesâ€. The "Manual for the use of brain oil" (hereinafter referred to as "certificate sheet") management. The “certificate†is used by the purchaser to obtain the naphtha consumption tax from the competent tax authorities before purchasing the goods. If the sales party sells its naphtha directly to units and individuals other than ethylene and aromatics production enterprises, it will not apply the "certificate sheet" for management and should report and pay the consumption tax in accordance with the regulations.
According to sources from the industry, with the completion or expansion of certain ethylene projects of the two companies before 2010, the demand for naphtha will increase accordingly, while the output will not keep pace with demand. These projects include Zhenhai ethylene project of 1 million tons, Fujian ethylene project of 800,000 tons/year, Guangzhou Petrochemical ethylene expansion capacity of 590,000 tons/year, and Tianjin Petrochemical ethylene expansion capacity of 1 million tons/year.
In the past 2007, due to shortage of raw materials, ethylene prices rose from 8,000 yuan / ton to more than 9,000 yuan / ton, domestic detergent, plastic products and other downstream industries can only have prices or closed down.
Experts stated that the exemption of the consumption tax for the production of raw materials for ethylene and aromatics products directly reduces the production cost of ethylene and will obviously benefit the ethylene projects of the refineries of PetroChina and Sinopec. At the same time, it also reduced the manufacturing costs of ethylene and downstream plastic rubber, and promoted the development of the organic chemical industry. It is expected that this adjustment will have a positive impact on PetroChina's earnings of around 600 million, while Sinopec’s positive earnings impact will be around 1.4 billion.
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