China to release policies controlling copper product tolling
Source: Interfax
metalsplace.com
China is set to announce new policies to control refined copper imports for processing and finished product exports. The new policies are aimed at reducing energy consumption and combating high pollution in the copper processing sector, and would badly hurt imports by copper processing companies, industry insiders told Interfax.
A China Nonferrous Metals Industry Association official, who wished to remain anonymous, said the government was considering charging 50 percent of the combined import and value added tax for refined copper imports. Companies will be remunerated the full amount after they export finished copper products.
"Copper processing companies will be required to pay roughly RMB 6,000 (US$775)to import one ton of refined copper, based on a current copper price of RMB 60,000 (US$7,750) per ton," the official explained.
"The Ministry of Commerce has requested feedback on this policy from major copper fabricators and has not yet decided on an implementation date," the official said.
Although the tolling business repayment process will only take approximately three months, company cash flow will be tied up during this time, a leading copper processing company official in China's Henan Province, who wished to remain anonymous, said.
The company official anticipated that China's copper consumption would decrease after the policy is implemented.
His company has received an internal memo from the CNMIA asking major copper processing companies including Ningbo Hailiang Group, Luoyang Gold Dragon Copper Tube Co. Ltd., Luoyang Copper Processing Co. Ltd. and Jiangxi Copper Group to attend a meeting regarding this issue on March 23.
Precision copper tube, which is widely used in air-conditioning units, will be the only type excluded from the policy, according to the memo.
The tax rebate on the export of copper products was lowered from 13 percent to 5 percent on Sept. 15, 2006. China canceled its tolling business for refined copper on Nov. 22, 2006 and has been hesitant to further cancel tolling businesses for copper products ever since receiving protests from many domestic copper fabricators.
Tolling is a practice used for the import of raw materials, the processing and re-export of finished products. During tolling, both imports and exports enjoy favorable tax policies as the Chinese government wishes to boost the domestic economy and increase international trade.
Shanghai copper futures fell by 1.41% to RMB 60,330 (US$7,795) on Wednesday after the International Copper Study Group released preliminary data for 2006 indicating a surplus of about 350,000 tons last year.
"The data is higher than what other institutions forecast, which might have sent copper prices down," said analyst Wang Xiaoli, at Shenzhen Goldbull Futures.
Domestic stockpiles and imports weighed on copper prices in the physical market.
"Spot prices are currently the same or even lower than the March delivery, while prices are $85 higher than copper for March delivery in London," said Wang.
Commentary
The domestic metals industry in general is in the process of developing a trend that is very much export orientated. This trend is concentrating on the high finished products export market. It began with steel early last year.
More recently the trend has become evident in the aluminium industry and now there are indications, through policy management, that the same pattern will be encouraged in the copper industry.
The value added products strategy seems to be working as there has been little international objection thus far. |
