China Imposed 25% Tax on the U.S.-Original Propane

On April 4, 2018, according to the Announcement No.34 [2018], China would impose 25% tax on the U.S.-original qualified propane with the HS code of 27111200, having great impacts on China’s LPG market.

In 2017, China imported about 3375kt of propane from the U.S., taking up about 25.28% of the total. The U.S. exported most of propane resources to the Far East, but the price advantage of the U.S.-original propane was lower than that of the Middle East-original propane. Besides, the arbitrage was far lower than the tax increase.

The refrigerated LPG CIF China was about $500/mt and would increase by RMB 800/mt when the tax rose to 25%. Moreover, SCI learnt that many domestic enterprises signed long-term propane contracts with the U.S. enterprises. Thus, it was tough for China’s enterprises to carry out the contracts due to the tax increase. Currently, as the implement time of the tax increase is undetermined, most market participants hold wait-and-see sentiment towards the LPG market.