China will raise export rebates on several key petrochemical products as part of wider support for the country's struggling export sector.
The government said yesterday it will increase the rate of export tax rebates on 1,464 items to 9-13pc, effective 20 March.
The changes affect petrochemical products such as ethylene, propylene, styrene monomer (SM), ethylbenzene and ethylene glycol (MEG), for which export tax rebates will be raised to 13pc. Most rebates were previously at 10pc.
China is typically a net importer of these petrochemical products. It imports more than 3mn t/yr of SM and 8mn-9mn t/yr of MEG to meet its demand.
But the country has been expanding its refining and petrochemical sector, with ethylene, aromatics and polymers capacity on course to rise by at least 20pc over the five years from 2019.
The increase in the export rate for these products to 13pc will encourage more overseas shipments, particularly of SM, to balance the increasing supply. It was previously economically viable only to export SM from bonded tanks.
Inventories of SM and polymers have been rising to historical highs after the coronavirus outbreak hit demand. The increase in the export tax rebate will offset the 13pc value-added tax on these products, encouraging exports and potentially helping the economy recover from the virus-related shutdowns.
