Singapore — China will offer tariff exemptions of nearly 700 types of goods from the US, including fuel ethanol, the Chinese government announced Tuesday, but traders are currently uncertain about its impact on future imports.

Importers can apply for tariff exemptions starting from March 2, according to a statement released by the Customs Tariff Commission of the State Council.
The exemptions would be for a year with each application would need to undergo an approval process.

Ethanol sources told S&P Global Platts that they remain cautiously optimistic but would definitely apply for the exemptions.

"The government would probably consolidate all the applications, consider the total quantity before granting approval as well as deciding on the exemptions to be applied," said an ethanol producer.

US denatured ethanol is subjected to 70% tariff into China.

Prior to the trade war starting April 2018, US denatured ethanol imports into China totaled 424,437 cu m over January-March 2018, accounting for 99% of the total denatured ethanol imports into China in the period. For 2018, a total of 521,070 cu m of denatured ethanol was imported from the US.

For 2019, China imported a total of 104,021 cu m of ethanol compared with 1,034,553 cu m in 2018.

In the absence of US supply, China had turned to South Africa to meet some of its demand because of the price advantage. China imported a total of 30,945 cu m of denatured ethanol from South Africa in 2019 versus 2,524 cu m volume in 2018.

Presently, demand for fuel ethanol in China is dismal with roads blocked and most cars off the road.

Instead, industrial ethanol for medical purposes saw increased demand during the Lunar New Year period with prices hitting around Yuan 6,000/mt early last week before easing to the Yuan 5,000s/mt level this week.