China ends complex export subsidies but aluminium rebate remains

According to the latest industry reports, China has agreed to end export subsidies it provided to industries including aluminium products, titanium and specialty steel after the U.S. complained to the World Trade Organization (WTO) in February 2015. This is indeed a big news for the companies buying aluminium product or semi-finished goods from China and for aluminium product producers who have been facing tough competition from Chinese exporters.

However, industry experts opine that rebates still remain while steps have been taken to do away with the subsidies. What they observe is that, the continued 15 per cent value-added-tax refund producers enjoy on exports of aluminium semi-finished products in the aluminium market outside China happens to be of much more concern. This is a subsidy that would be bad enough in itself but which is being gamed by producers selling primary metal as product and, in so doing, swamping the Asian market with primary metal that is suppressing the price. China has given absolutely no indication that it is looking at amending that subsidy and nor says Home should we expect any change soon.

So before buyers go checking their contracts and producers start gearing up for an uptick in orders, experts say, they should do a double take and see this latest bit of news for what it is, useful no doubt in some product areas, it will have minimal to no impact on aluminium.