China may raise primary aluminum export tax to secure domestic supplies - CNMIA official

Shanghai.May 29.INTERFAX-CHINA - The China Nonferrous Metals Industry Association (CNMIA) is in discussion with China's Ministry of Commerce over a further increase to the primary aluminum export tax in order to divert more primary aluminum output towards domestic demand, a senior CNMIA official told Interfax today.

"In view of the high primary aluminum export volumes seen over the first few months of this year, we believe it's necessary to further tighten the export policy on primary aluminum, as well semi-aluminum products, to an extent pending results from further research and analysis," Jia Mingxing, vice president of CNMIA, said at the Fifth Shanghai Derivatives Market Forum in Shanghai.

"Such a move would be in line with the country's growing awareness of the need to protect mineral resources and the widely-accepted concept that the country's aluminum production shall primarily serve the domestic market. It would also help expedite the development of the deep-processing sector of the aluminum industry," Jia said.

"Despite China's tight monetary policy, its demand for nonferrous metals, including aluminum, is still expected to increase this year thanks to rapid economic growth and the further development of markets in rural regions," Jia said.

"The snowstorms that hit southern China at the beginning of the year and the recent Sichuan earthquake have affected production of nonferrous metals in the provinces of Hunan, Guizhou, Jiangxi and Sichuan, but have also served to stimulate the consumption of nonferrous metals as well," Jia said.

"China's demand for primary aluminum in 2008 is expected to grow in excess of 22 percent on last year's 12.3 million tons, outpacing a forecast of 8.9 percent year-on-year growth for wider global demand, which is expected to hit 41.1 million tons. Annual Chinese demand may lift to 29 million tons over the next 10 years," said analyst Paul Robinson, with CRU Group.

"As for primary aluminum production in China this year, we estimate that it will come to 14.8 million tons, based on the assumption of a 500,000-ton loss caused by the snowstorms and a 60,000-ton loss due to the earthquake," Robinson said.

China increased its export tax on primary aluminum from 5 percent to the current 15 percent on Nov. 1, 2006, and began to levy a 15 percent export tax on aluminum rod and bar on Aug. 1, 2007. China exported 22,080 tons of primary aluminum in the first four months of this year, down 70 percent year-on-year. Over the same period, imports fell 9 percent year-on-year to 48,993 tons.

In 2007, China was a net exporter of 49,430 tons of primary aluminum, even though exports were down 80.8 percent from the previous year at 160,793 tons. Imports were down 61.5 percent on an annual basis for the year, according to China General Administration of Customs (GAC) figures.

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