South Korea will reduce the toluene export tax from 1.8% to 1.67% with effect from January 1, 2017, but market sources were doubtful Thursday whether this would have a major impact.
Initially the export tax was 2% to China but since 2015, the export tax was being reduced by 0.133% each year for 15 years until the export tax becomes zero as part of a free trade agreement, a South Korean seller said. Demand for South Korean cargoes could rise amid lower tariffs, a second South Korean seller said. "Southeast Asia cargoes have an export tax of 2% to China.
If you compare that with South Korean cargoes, that is an additional 0.4% tax starting 2017," a Chinese buyer said.
Other Asian sellers said it was still too early to tell if the reduction of the tax from 1.8% in 2016 to 1.67% in 2017 will have a significant impact.
"I don't see any big impact at this moment, perhaps due to the lower tax structure, South Korean sellers could take the opportunity to raise prices instead," a northeast Asian seller added.
A southeast Asia seller was doubtful whether the reduction of the tax by another 0.133% would make their cargoes uncompetitive.
