China imposed a 15% duty on US denatured ethanol, on top of the existing 30% levy, starting today.
The additional duty, coming as part of retaliatory duties to US steel and aluminum tariffs, will close the arbitrage window to import US fuel ethanol into China, according to market sources cited by Platts.
Taking into account the import duty of 45% and value added tax (VAT) of 17%, the cost of buying denatured ethanol from the US now outstrips China's domestic price.
China's ethanol imports plunged in 2017 after the imposition of the 30% duty on denatured ethanol at the start of 2017. However, they rose in January and February 2018 due to lower US ethanol prices in the fourth quarter which created an arbitrage window in spite of the 30% Chinese import duty, Platts said.