China Increases Tax Rebates for Steel, Aluminum and Copper

As if in answer to a growing trend for aluminum semi finished products to be moved from Chinese producers to those in Russia, India and elsewhere, the State Council, China¡¯s cabinet, announced on Wednesday of last week that China will increase tax rebates on exports of some textiles, iron and steel, non-ferrous metals, petrochemicals and light industrial goods, but did not give details, said Reuters. MetalMiner has seen several aluminum supply programs which had been sourced in 2007/8 from China moved to suppliers in Russia as the SHFE price premium over the LME has widened and Chinese aluminum sheet, plate and extrusions have proved to be progressively less competitive. The main beneficiaries have been Russian mills, where they can meet the specifications. With this trend accelerating in recent months it was inevitable the interventionist Chinese government would step in to help the local producers at some stage particularly when employment has become such an issue in the local market.The Shanghai Securities News reported this week that the tax rebate on aluminum products such as foil, profiles and flat rolled sheets and plates is likely to increase to 13% from 5%, while some other products currently with a zero rebate are likely to increase to 13%. The same report states tax rebates on certain copper tube products, sheet and plate will also rise but no figures were given. The China Iron & Steel Association CISA has proposed raising the tax rebate on hot rolled and galvanized steel coil from 5 to 17% as the industry suffers from serious over capacity in the face of falling domestic demand. However the expectation appears to be that the rebate will be lower than the CISA has been pushing for. As China seeks to boost exports, other countries are taking steps to counteract the perceived threat this will pose to their domestic producers. India has imposed a 21% import duty on flat rolled aluminum and a 35% duty on aluminum foil, largely to counter the perceived threat from China. We will publish more specific details as and when they become available.¨CStuart Burns

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