China plans to change import tariffs on ethanol in 2017, but it was unclear if Beijing would raise or lower taxes, traders said, noting the move could affect demand for US-produced ethanol at a time of record production.

China will remove a low tariff rate of 5 per cent for domestic fuel companies on fuel ethanol in 2017, two US traders said, citing contacts in China and a statement from the country’s finance ministry.

Beijing introduced the low rate in 2010, dropping it from 30 per cent previously in a move that opened the market to imports as top producers the United States and Brazil were boosting their production of the biofuel, which is made from corn or sugar.

It was unclear how Beijing will revise the taxes, and the moves came as the US industry is facing uncertainty over President-elect Donald Trump’s plans for the country’s biofuels requirements.

A decision to lower the rate would keep the door open for the huge volumes of fuel now flowing to the Asian country, but a hike to pre-2010 levels would hinder buying in a market that has become key for US producers.

That would be "hyper bearish" for US ethanol prices, said a US trader of a potential hike.

China’s appetite for foreign ethanol has been growing. In the year through November, the country’s imports of ethanol were up more than 50 per cent over the prior year’s record levels.

The potential change comes at an uncertain time for the US ethanol producers.