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Print[Ferro-Alloys.com] China has adjusted taxes on copper exports in a bid to ease the burden on smelters caused by fluctuating prices for the red metal, a source at a major smelter said.
As of July 1, smelters have been subject to a 17 percent value-added tax based on income from processing, rather than a three percent tax on the export price as was previously the case, said Xu Changning, an executive in the trading department of Anhui Province-based Tongling Nonferrous Metals Group.
The change appears to be in the pilot stage as it has yet to be officially announced and details of how exactly the new duty will be levied have yet to be finalized. Nevertheless, the adjustment is certain to make exports more profitable for China’s copper smelters, said Xu.
Under previous regulations, smelters risked losses when exporting the finished metal due to frequent price fluctuations, and the new tax structure will help reduce risks arising from changes in the London-Shanghai price gap, said Antaike Information analyst He Xiaohui.
Downwards pressure on copper prices from weak domestic demand and high stockpiles are other factors likely to have influenced the move.
While a lighter tax burden on exporters is set to boost outbound shipments in the coming months, the move has had no noticeable impact on July shipments as smelters held back amid the uncertainties that remain over how the duty will be levied.
Exports in July were down 64.75 percent month-on-month at 12,506 tons, show customs data released Monday.
China maintains strict controls on copper exports in order to ensure domestic supplies as the world’s largest consumer. Only seven major copper smelters are currently authorized by the government to export the processed metal.
Data from the Ministry of Land and Resources (MLR) shows that China’s self-sufficiency in refined copper was only 31 percent last year – lower even than its self-sufficiency in oil andiron ore.
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