China targets Singapore bunkering

Chinese tax reform will trigger a gradual shift in the bunker fuel market away from Asia’s dominant hub

The timing of a package of Chinese tax reforms will have a greater impact on the future of the Asian bunker fuel market than the new International Maritime Organization (IMO) rules on sulphur in maritime fuel that came into effect on 1 January. China applies both consumer and value-added taxes to bunker fuels, even for bonded sales. This leads blenders to import about 90pc of the blendstocks, mostly from Singapore and Malaysia. “The tax is the big game changer,” says Dr Michal Meidan, director of the China Energy Programme at Oxford Institute for Energy Studies. Chinese refiners, she says, have been lobbying for tax relief for well over a year. The IMO has banned ships from using fuels with