Fear overdone over China aluminium semis export rebate removal

It is worried that China will cancel export rebate on aluminium semis as well after its recent decision to remove export rebate on seven industries.

SMM deems such concerns as overdone and sees little possibility for China to do so for the foreseeable future, citing three reasons.

Currently, China offers 13 per cent rebate on exports of aluminium extrusion , plate/sheet, strip and pipe/tube, as well as 15 per cent rebate on aluminium foil exports. Chinese aluminium semis exporters need to pay 17 per cent VAT. That is to say, they are still subject to 2 per cent-4 per cent tax even after the rebate. SMM learns that export profit margins at most Chinese aluminium processors are less than 10 per cent after counting in export rebate. Should the rebate be abolished, Chinese exporters will suffer losses or report meager profit.

Besides, removal of export rebate will deal a heavy blow to export activities, which totaled 4.19 million tonnes in 2015 and accounted for 9 per cent of the country’s total output. This in turn will lead to severe oversupply in domestic market.

In fact, China raised export rebate and cut export duty on deeply-processed aluminium products during 2009, 2014 and 2015. Cancelling the rebate will run against the central government’s longstanding intention of encouraging exports of such products.