The State Administration of Taxation of China recently issued an announcement to clarify the relevant policies on the consumption tax of petroleum refining and production. Where the product complies with the levy regulations for gasoline, diesel, naphtha, solvent oil, aviation kerosene, lubricating oil, and fuel oil, the consumption tax shall be levied in accordance with the relevant regulations; other products shall be consistent with the national standard or industry standard name and quality standard, and If the product inspection certificate is filed, no consumption tax shall be levied. Otherwise, the consumption tax is regarded as naphtha. The announcement will be implemented from January 1, 2013.

Treasure Island analysis believes that along with the implementation of this policy, harmonized raw material manufacturers such as naphtha, MTBE, and aromatized gasoline will bring greater impacts, and the profits of blended oil merchants will also be curbed, and the reconciliation of oil markets will be renewed. Face shuffle.

Among them, for naphtha products. In August 2012, the State Administration of Taxation used enterprises that used naphtha and fuel oil to produce ethylene and aromatics chemical products, including naphtha and fuel oil, which were used for the continuous production of ethylene and aromatics chemical products. [2011] Document 87 retired (exempt) excise tax rules and the need to apply for retired (exempt) excise duty to make an announcement. The publication of this detailed rule was transferred from the previous upstream manufacturers to the return of downstream users, which effectively contained the leakage of naphtha consumption tax. However, at present, the resources that are widely circulated in the domestic market are mostly products of local enterprises. The use of these resources is basically used for reconciliation, and more than 85% of them are used in the form of tax receipts for chemical products. The clarification of the excise tax on petroleum refining and production will further regulate the excise tax on non-chemical naphtha resources. For production companies, the consumption tax levy will undoubtedly increase its cost, and the ex-factory price will also increase, thus shifting the pressure to the downstream reconciliation business. At the same time, the naphtha market's tax and fee policy is more clear, and traders' profits will bear the brunt of the impact. The supply of naphtha resources in the domestic reconciliation raw material market may be affected.

For MTBE products. At present, 90% of domestic MTBE are used to reconcile high-grade gasoline, and chemical use is less than 10%. For the implementation of this announcement, for the production enterprises, on the one hand, Sinopec and CNPC’s products are mainly self-use and rarely go out. The impact of the levy is limited; on the one hand, local refineries and private enterprise products are mostly of low purity. It is suitable for the blending of petrol and has a very low proportion of chemical uses. They have also become the largest recipients of the announcement. According to Treasure Island, this year's domestic MTBE manufacturing enterprises were hit by the shortage of raw gas resources and the lack of demand in the gasoline market. The operating rate of the manufacturers continued to remain low, about 35-40%. Entering next year, the implementation of this policy will inevitably reduce the circulation speed of MTBE resources. Domestic MTBE manufacturers are facing the triple pressure of lack of upstream raw materials, increase of intermediate taxes, and weak downstream demand, or will usher in the reshuffle of the industry.

For aromatized gasoline. In the past three years, domestic aromatization manufacturers have sprung up like bamboo shoots, and their main product, aromatized gasoline, has also gone through chemical light aromatic tax channels. Because the quality of the product is very similar to that of gasoline, it is not excluded that it will be levied on gasoline consumption tax later. As with MTBE manufacturers, aromatization manufacturers are also faced with three big mountains with scarce raw material costs and difficulty in eliminating raw materials, increasing intermediate taxes, and having limited downstream demand. The company's living space is very small; at the same time, it is due to aromatization manufacturers. The device is too small and the ability to fight against it is limited. The pressure on the latter stage is even greater.

To sum up, the clarification of the consumption tax levy will not only bring greater negatives to the above-mentioned raw material manufacturers, but also directly affect the oil product market; at the same time, it will also bring a huge blow to the gas deep processing industry.