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China's Sinopec is seeking duty relief for US crude



The largest refiner in China and Asia, Sinopec, plans to apply for a Chinese customs clearance for its US crude imports, Reuters reported Monday, citing sources familiar with the problem.

On Friday, China and the US traded tariff and counter-tariff notices, and Beijing first said that China would place tariffs on a number of US products worth $ 75 billion, including crude oil, in two batches starting September 1 and 15. December. US President Donald Trump retaliated with announcements of higher tariffs for Chinese products.

The ending of the ceasefire in the US-China trade war and the highly unpredictable nature of the next features of the trade war have made traders in China even more reluctant to buy US crude despite the favorable economy, Chinese traders told S&P Global Platts earlier this month.

Chinese customers do not touch spot loads and do not even think about long-term agreements, traders told S&P Global Platts. However, some Chinese companies have such long-term agreements, such as Unipec, Sinopec's trading unit.

In the midst of the trade war, Sinopec is now preparing contingency plans following China's announcement that it would begin imposing a 5 percent tariff on US crude with effect from September 1

. According to Reuters' sources, this tariff will make US commodities $ 3 a barrel more expensive for Chinese buyers.

Sinopec plans to apply for some sort of tax exemption for its import of US crude, sources told Reuters. The Chinese refiner is also considering storing US oil in restricted storage, which has not yet cleared customs duties in China, or sending it to other destinations, according to one of the sources.

In September and October, Sinopec is expected to receive a total of 8 million barrels of US crude, reports Reuters, citing data from Refinitive and Kpler.

By Tsvetana Paraskova for Oilprice.com

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