Recently, the Fourth Regional Comprehensive Economic Partnership Agreement (RCEP) was officially signed after 8 years of long negotiations. Industry insiders said that the signing of RCEP will benefit some commodity trade.
“The main benefits of RCEP are twofold: one is the gradual reduction of tariffs and non-tariff barriers, and the other is that the level of openness in trade in goods reaches more than 90%, covering a wider range of products.” Longzhong Information analyst Li Yan Said that for China, this means a reduction in imported raw materials and manufacturing costs, and at the same time, it will help expand exports in some areas and further open up overseas consumer markets.
“One of the highlights of this agreement is the accession of China, Japan, South Korea, and Australia. As we all know, Australia is the largest source of China’s LNG imports,” said Ying Ying Liang, an analyst at Zhuo Chuang Information. According to statistics from Zhuo Chuang Information, in the first three quarters of 2020, Australia accounted for 45.6% of China’s imported LNG resources, still occupying the top of the list of import sources.
According to statistics from Zhuochuang Information, in the first three quarters of this year, China’s total natural gas supply was 241.4 billion cubic meters, of which self-produced natural gas was 137.8 billion cubic meters, a year-on-year increase of 6.74%; LNG imports were 67.4 billion cubic meters, a year-on-year increase of 11.22%; pipeline gas Imports of 36.2 billion cubic meters, down 7.18% year-on-year. In terms of consumption, in the first nine months of this year, China’s apparent natural gas consumption was 237.6 billion cubic meters, a year-on-year increase of 5.13%.
Liang Yingying believes that through the signing of RCEP, China, Japan, Japan and South Korea are expected to establish a new free trade partnership, and the degree of free trade within the region will be further enhanced. The increase in trade between China, Japan and South Korea will also help the development of China’s LNG tank containers.
It is understood that light cycle oil (LCO) is a 100% imported variety, mainly used as a regulating component of diesel. Due to the ASEAN preferential country policy, import tariffs from ASEAN countries have been zero. However, in terms of import volume, South Korea is the largest source of imports for China’s LCO, with a tariff of 4.2%, while Japan’s imports are relatively large, with a tariff of 7%. “Once tariffs are lowered or even canceled in the later period, the import volume of LCO will inevitably increase under the cost advantage. However, the current domestic supervision on this aspect is still strict, and there are irregular inspections in East China and South China, which may inhibit its import growth in the future. An important factor of the quantity.” Li Yan said.
Currently, China imports base oil from East Asian countries with varying degrees of tariffs, and imports from South Korea and Singapore account for 70% of the total imports. “Once the tariff is reduced or even cancelled, the cost is superimposed on the advantages of bills, and the import volume of base oil may increase significantly.” Li Yan said that at present, the main consumers of imported base oil are domestic Mobil, Castrol, and Shell, but these giants companies have begun to pay attention to domestic resources, and the future increase in imports may also have a certain impact on the supply and operation of domestic base oil.
If tariffs between countries in the region are reduced or canceled, it will bring certain cost advantages to the import of asphalt. Currently, about 60% of China’s imported asphalt originates from South Korea, and about 95% originates from East Asia. “However, in recent years, China’s import dependence on asphalt has been declining year by year. It is expected that the import volume will not rise significantly with the reduction or elimination of tariffs. At the same time, taking South Korea as an example, with the implementation of the IMO2020 new policy, the output of low-sulfur marine fuel will increase, which will curb the output and external supply of asphalt.” Li Yan said.
It is understood that China’s petroleum coke currently imports more needle coke, mainly because some of the high-end technology of needle coke is currently lacking in China and the largest source of imports in South Korea. “If there is no significant technological breakthrough, the import of needle coke will be just needed. Once tariffs are reduced or even canceled, China’s needle coke imports are expected to expand. At the same time, once the tariff barrier is gone, domestic ordinary petcoke is also expected to open up export channels, and start export operations to East Asian countries.” Li Yan said.