China aluminium exports to surge on trade war - CRU
LONDON – Chinese aluminium exports are expected to surge in coming months and next year after Beijing boosted tax rebates as part of a package to soften the impact of a trade war with the United States, according to industry consultancy CRU.
High Chinese exports of metals such as aluminium and steel in recent years have spurred criticism by both the United States and Europe, and was one reason for the imposition of tariffs by Washington.
Last month, China increased its rebate on value added tax (VAT) for exports of semi-fabricated aluminium or semis to 16% from 13%, said senior analyst Greg Wittbecker of consultancy CRU.
That will increase exports of both legitimate semis as well as so-called "fake semis", which have been transformed from primary metal just enough to escape China's export tax on unwrought metal and instead qualify for a VAT tax rebate, he added.
Often these "fake semis" are later melted back into primary metal by the end user.
"We think exports of semis will rise significantly over the course of the year (2019) and fake semis alone could probably approach 800,000 tonnes," he said at a presentation during industry gathering LME Week.
Even before the boost in the tax rebate, exports were rising since even at the 13 percent rebate level exports were profitable, said Wittbecker, who formerly worked for aluminium producer Alcoa Corp.
Fake semis have already been showing up in South Korea, Thailand and Malaysia, he added.
In August, Chinese exports of unwrought aluminium and aluminium products were 517 000 t, up 26.1% compared to the same month last year.
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