Revocation of Chinese export duty on aluminium rods unlikely to raise exports

Chinese aluminium market players when contacted for information revealed that they expect the government will revoke the 15% provisional export duty imposed on aluminium non-alloy rods.

This of course creates an opportunity for the exports to boom but removal of export duty alone cannot aid the surge in exports as the SHFE/LME aluminium price ratio also plays an important role.

SMM analyst Liu Xiaolei says that the Chinese aluminium rod makers will not be willing to do any bulk export unless the SHFE/LME aluminium price ratio is overwhelmingly favorable.

The current installed aluminium rod capacity now exceeds 1 million tonnes in China but most of that is sold domestically to cable and wire companies. Some of these companies are vertically integrated, that is, they buy ingots from primary producers, make rods and then derive wires and cables from them.

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