Analysis on impact brought by levy on aluminium alloy

Levy on aluminium alloy brings negative effect to electrolytic aluminium price; while space of price fall is limited in the short run as it is supported by favorable cost predominance at present.

During January to June 2008, export of unforged aluminium alloy 380000T, 23 pct of the country¡¯s total export and 5 pct of its electrolytic aluminium consumption. Therefore, increase of tax will cut electrolytic aluminium consumption, which will in turn pose pressure on the price. 

Tax on aluminium alloy changed the relationship between international and domestic electrolytic aluminium markets. It increases cost and decreases export, uplifting supply in the country. While on the other hand, this means that international market will be more demanding on electrolytic aluminium.

It is predicted that in H2, 2008, aluminium price will vibrate within the range of 18000 to 20000 yuan per ton; while gross profit rate will further decrease. 

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