Passing Petrochemical Revival Rules to be Approved

On April 27, when attending a forum, Li Yongwu, president of the China Petroleum and Chemical Industry Association, disclosed that in the first quarter of this year, the petrochemical industry showed signs of recovery. In particular, in February and March, the output of some chemical products increased significantly, and prices stabilized and stabilized. In March, the processing volume of crude oil increased by 13.2% compared with the previous month, and refined product output increased by 13.7% from the previous period. Some product demand has rebounded sharply, inventory has declined, and overall product prices have stabilized.

In the week before Li Yongwu’s high-profile remarks, a “rumor” from the China Petrochemical Association was circulating in the market. A number of media have said that they learned from the China Petrochemical Association that the supporting rules for the revitalization of the petrochemical industry were issued before April 20 and will be announced in the near future.

However, until April 28, reporters still could not obtain a more accurate source of information on the introduction of this rule. At the aforementioned forum on April 27, Li Yongwu did not make a statement on this.

Several industry sources interviewed by the China Economic Times said that such "rumors" actually reveal the ardent aspirations of the industry. The statistics released by the Bureau of Operational Monitoring and Coordination of the Ministry of Industry and Information Technology on April 3 shows that from January to February of this year, the added value of China's chemical industry increased by 0.7% year-on-year. Calculated on the basis of comparable days, the chemical value added in the first two months was the same Increased by 2.4%. According to Zhu Hongren, Director-General of the Office of Operational Monitoring and Coordination, although the decline in the production of major chemical products has slowed down significantly, “the chemical industry is still the most difficult industry in China's raw material industry.” “At present, we must pay close attention to implementing the adjustment and revitalization plan for the petrochemical industry. Clear policies and measures to guide and help the industry and companies out of their predicaments."

Approval of projects to speed up backward production capacity needs adjustment

Petrochemical's large and wide-ranging industry has outstanding structural problems. Zhao Jungui, secretary general of the China Petrochemical Association, said that from the perspective of the entire industry, structural problems are mainly reflected in "supply of high-end products and overcapacity of low-end products."

According to Wang Xiaofeng, deputy director of the Industrial Development Department of the China Petrochemical Association, the National Development and Reform Commission has organized experts to review eight major industry rejuvenation programs including petrochemicals and a total of more than 1,100 projects. Among them, more than 100 petrochemical projects have passed the audit. Eighty or ninety."

Since the industrial restructuring and rejuvenation plan entered the agenda of the State Council and local governments, adjustment of the industrial structure, especially the reduction of backward production capacity, is almost the main goal of the plan. However, projects in the petrochemical industry are so fast and they have to worry.

The major petrochemical projects that have been approved include 12 million tons of refinery projects in Huizhou, Guangdong, 700,000 tons of xylene projects in Fuzhou, and 1.2 million tons of phosphoric acid in Yunnan Yuntian. These projects are all large-scale projects and their impact on total production capacity is extraordinary. However, Zhao Jungui said that the plan emphasizes that strict restrictions should be placed on new projects that are newly started and that repeated construction should not occur again.

The industry recently reported that the government will give a 6% discount rate for these approved projects. However, Wang Xiaofeng told this reporter that because the National Development and Reform Commission has set a limit on the total amount of items for various localities, local governments may adjust these items that have already been reviewed.

With the preferential policies, coupled with the abundant liquidity support provided by Tianliang Credit, it is obviously a great impetus to the current petrochemical industry, which is in the doldrums.

The reporter found that among the first approved petrochemical projects, products such as oil refining, ethylene, xylene (PX), refined terephthalic acid (PTA), fertilizers, and olefins were supported. This is mainly due to domestic supply security and the need to stimulate economic development. According to the latest statistics from the China Petrochemical Association, the current domestic self-sufficiency ratio of olefins is only 50%; moreover, the investment in refining and olefin projects is large, and the effect of stimulating domestic demand will be obvious.

In response, Wang Xiaofeng said, “We have prepared a list of petrochemical industries supported by the state.” According to its introduction, this catalogue mainly includes high-tech industrialization projects, chemical fertilizer and pesticide structural adjustment projects, refinery oil upgrading projects, and engineering technology localization. project.

The price reform can take the opportunity to deepen

Windfall tax adjustment will not involve

Since this year, the price system reform of chemical products has been carried out in full swing. On January 1st, the reform plan for refined oil prices and taxes was implemented. On January 25, fertilizer prices were fully liberalized.

The industry expects that the reform of refined oil prices and taxes can be deepened within this round of adjustment and rejuvenation plans. A number of industry insiders told this reporter that moving the excise tax on refined oil consumption to the wholesale link and converting it to extra-exemption is a feasible method.

The biggest problem with the current implementation of the production link collection model is that it is difficult to straighten out the distribution mechanism. The fuel tax can only be levied as a central tax first, and then through fiscal transfer payments to distribute income to local governments. This operation is not conducive to mobilizing the enthusiasm of local governments to participate in and support reform, and it is difficult to effectively link the interests and responsibilities of the central government and local governments. . In contrast, extra-exemptions are more transparent.

Closely related to the refined oil price mechanism is the "windfall tax" issue. "Wind tax", also known as special income, is an irrational over-profit taxation of monopoly industries. At present, the main point of the party opposing the increase in windfall profits tax is that taking into account the oil refining losses and operational difficulties of the two major oil companies last year, “collecting high special income proceeds will only increase the burden on the company.” Therefore, in the adjustment and rejuvenation plan, a relatively reasonable threshold of 60 US dollars/barrel was set. Due to the high price of crude oil, the performance of the two major oil companies last year showed their first decline since 2001, and the profits tax has increased significantly. The profits tax paid by PetroChina last year increased by 40,629 million yuan over the previous year. Sinopec paid 32.823 billion yuan in profits last year, an increase of 193% year-on-year.

Yang Zhigang, deputy director of the Finance Research Office of the Institute of Finance, Trade and Economics of the Chinese Academy of Social Sciences, told this reporter that the windfall tax is a tax category. Even if it is to be changed, it needs to go through the procedures of the National People's Congress. Therefore, the revitalization plan cannot mention this content.

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