China to Further Control Copper and Copper Product Exports
By David Harman
16 Apr 2007 at 08:44 AM GMT-04:00
resourceinvestor.com
SHANGHAI (Interfax-China) -- China is likely to impose stricter controls on copper and copper product exports in the next few months in order to curtail the current trade surplus and reorganize the copper industry to mainly serve the domestic market, a top official from the China Nonferrous Metals Industry Association said.
"The government is concerned by the high trade surplus that has risen over the last two months. As the domestic copper industry has not followed government suggestions to focus more on serving domestic demand rather than on overseas exports, the central government is considering cutting or canceling all copper product export tax rebates in the next few months. However, an implementation date has not yet been set," said vice-chairman of the China Nonferrous Metals Industry Association, Wang Gongmin, at the 2007 Copper & Aluminum Summit Meeting held in Shanghai on Saturday.
The CNMIA is currently lobbying the government to retain copper product export tax rebates of at least 1% so as to grant copper fabricators a six to12 month buffer period to rearrange their production and export systems, Wang said.
"If export tax rebates are canceled, the government is likely to impose an export tax on copper products," he commented.
With the exception of copper tube, China's copper product export tax rebates were reduced from 13% to 5% on Sept. 15, 2006.
Refined copper exports are currently taxed at 10%. Wang warned that the government is very likely to increase the export tax to a maximum of 30%.
To further control copper and copper product exports, copper tolling (importing copper concentrate and re-exporting refined copper under favorable tax rates) was prohibited last November.
The Chinese government is planning to further restrain copper product tolling (importing refined copper and re-exporting semi-finished products) by charging value added tax (VAT) on copper exports. VAT would be repaid after the product is re-exported.
China exported 559,100 tonnes of copper products last year, up 20.61% from the previous year, with 85.23% of which being copper foil and tube exports.
China will produce between 3.27 million and 3.30 million tonnes of refined copper this year, up between 9% and 10% from last year. The annual growth rate will drop slightly from that of 10.92% between 2005 and 2006, Wang predicts.
Wang also forecasted that domestic consumption of refined copper will increase to 4 million tonnes this year, up from 3.8 million tonnes last year.
Commentary
The copper industry, as well as aluminum, nickel and other ferrous nonferrous industries have been subject to official concerns in recent weeks. Yes, the government is voicing concerns vis-à-vis the increasing trade gap, yet these industries are reaching domestic full capacity and will rely upon exports to sustain.
That said, copper imports where up 28.35% in the first 3 months reaching record levels, whilst exports were down 9.7% in the first 2 months. These record import figures have been driving prices to multi-month highs and even a hint of domestic overcapacity coupled with further export restraints may impact current price euphoria.
Copper futures soared on the Shanghai Futures Exchange on Monday due to high demand expectation after the LME Copper touched a seven- month high of $7,955 during last week.
"In addition to the expectation of high demand from China, we also heard that two shipments of copper from Argentina will be delayed, this is causing international investors to predict a rise in copper prices," said analyst Tian Jie at Nanhua Futures.
© Interfax-China 2007.
This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 10 free copies of this, please e-mail david.harman@interfax-news.com. |
