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China's Dec petroleum bitumen blend imports more than triple on year to 0.94 mil mt

http://www.chemnet.com   Jan 28,2015 Platts
China's petroleum bitumen blend imports in December surged by 224.6% year on year to 941,695 mt, data released Saturday by the General Administration of Customs showed.

Imports in December were also up 209.2% from 304,511 mt in November.

The fuel is known locally as diluted asphalt, but is nothing like the heavy tar used to pave roads.

Only since late 2013 have independent refineries started importing this blended bitumen for feedstocks into crude distillation units or coking units.

Independent refineries, concentrated in eastern China's Shandong province, used to rely on imported fuel oil in the past years as a main feedstock, as they had limited access to crudes.

Malaysia was the top supplier of petroleum bitumen blend in December, with imports reaching 846,440 mt, up 179.4% from November.

There were no imports from Malaysia in December 2013.

Imports from Indonesia were at 94,874 mt in December, compared with none in November.

The December volume however, was down 67.3% from the same month in the previous year.

About 771,000 mt of blended bitumen, in eight cargoes, were seen to have arrived at Shandong ports in December.

This was up 108% from the four cargoes totaling 370,000 mt received by four teapot refineries in November.

TEAPOT REFINERS' APPETITE FOR BITUMEN RISES

China imported 4.45 million mt of petroleum bitumen blend over January- December 2014, up from 1.64 million mt in 2013.

Malaysia was the top supplier to China in 2014, where volumes jumped 991.5% on the year to 3.58 million mt.

Imports from second-largest supplier Indonesia fell by 34.8% to 754,754 mt in 2014, from 1.16 million mt in 2013.

Bitumen blend typically comprises heavy residual oil like bitumen or 380 CST fuel oil, which is blended with lighter products such as gasoil.

When processed at coking units, it typically gives a yield of around 53-54% gasoline and gasoil, which was not bad considering its import cost, according to refinery sources.

The density of bitumen blend is typically 0.98 g/ml to 0.99 g/ml, with sulfur content ranging from 1.5% to 2.5% and carbon residue around 16% to 20%.

The main advantage of bitumen for teapot refiners however, has less to do with quality and more to do with taxation.

Bitumen cargoes are blended at the floating storages in Malaysia, and tagged with the certificate of ASEAN origin before being sold into China.

This certificate of origin can exempt the cargo from the 8% import tariff, said market sources.

Under the China-ASEAN Free Trade pact, there is no import tax imposed on asphalt, or bitumen, or agricultural products from the ASEAN countries. But this does not apply to fuel oil.

However, there is now talk in the market that the government will levy a consumption tax on bitumen blend, which has similar properties to fuel oil.

Fuel oil attracts a consumption tax of Yuan 1.20/liter (19 cents/liter), or Yuan 1,218/mt while bitumen blend does not.

Some refineries have been approached by local customs officials looking at the use of bitumen blend in refining units, according to sources.

Currently, the asphaltene content of bitumen blend must be no less than 8%, which is the specification set for imports under the HS code 27150000.

However, sources said the Chinese customs may impose additional parameters under the specifications for bitumen.

Should this happen, independent refiners will probably not be able to import bitumen blend under the current HS code.
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