China may reduce export tax rebates on products that use base metals as its
main raw material to 5 percent from 13 percent, from July 1, industry officials
said on Friday.
The rebates for products that use copper, aluminium, lead, zinc, tin and
nickel are being reviewed, said the officials. Beijing is also likely to reduce
a rebate on exports of steel products including stainless steel products.
"Departments are reviewing," an official for the State Administration of
Taxation said when asked whether the government was about to reduce the rebates
on most metals products exports to 5 percent.
An official for the tax division of the Ministry of Finance did not comment
on the rebate cut.
China has long granted rebates on valued-added tax for some exports. For
primary copper, zinc and tin, exporters can claim 5 percent of the export price
as a rebate, down from 13 percent two years ago. But most metals products carry
a rebate of 13 percent.
The rebates were designed to encourage exports. But now the country is trying
to rein in the resource-intensive metals sector and reduce exports.
Falling products exports could dampen the demand for primary aluminium in
China because such exports are large.
"We are worried sales will fall in the second half," an official for one
aluminium fabricating plant in China's southern province of Guangdong said,
referring to products such as window frames and computer fans. He said Chinese
aluminium plants would have to increase export prices by 6 to 8 percent to
offset the rebate cut.
Industry officials say demand for metals other than aluminium would not be
hit too hard.
"If the reduction covers only products like copper rod, the impact would not
be great because such exports are not great," Zhang Heng, an analyst for Jinrui
Futures, said, referring to semi-fabricated copper products such as sheet and
foil.
Jinrui is a subsidiary of Jiangxi Copper Corp, the country's top copper
producer and the parent of listed Jiangxi Copper Co. Ltd.
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