Interpretation of the impact of metal plus 15% export tariff on metal prices

Last week, the trend of base metals was relatively diversified. The prices of zinc, lead, aluminum and tin continued to rise. The price of copper continued to remain stable, while the nickel price dropped slightly. Among them, in the last trading day of the week, LME base metal varieties have different degrees of rising performance, and an important factor that incentivizes the rise of base metals is China's adjustment of non-ferrous metal export tariffs.
China’s Ministry of Finance announced on October 27 that it will impose a lower tentative tax rate on 58 imports. The tax rate for 26 resource products such as coal, refined oil and alumina will be reduced from 3-6% to 0-3%. At the same time, 110 items will be subject to export tariffs in the form of provisional tax rates, of which 11 non-ferrous metals such as copper, nickel and electrolytic aluminum are 15%.
From the published news release, controlling the high energy consumption, high pollution, and export of resource commodities is the theme of the State Council, and for the goods themselves, it only increases the cost of trade. For non-ferrous metals, China is the net importer of most of the non-ferrous metals. Therefore, the tax increase on non-ferrous metals exports has a limited market impact on copper, nickel and other varieties, but the net exports of primary aluminum are Certainly affected. If the primary aluminum market in the international primary aluminum market declines due to China's primary aluminum export tariff adjustment, then the international aluminum price will increase due to the decrease in supply. The rise in LME aluminum prices on Friday is a direct reflection of China's tariff policy. However, from the perspective of the relationship between supply and demand for commodities, tariff adjustment will not increase market supply, nor will it reduce market output. Therefore, tariff policy is a limited factor. If the international primary aluminum prices increase due to China's export tariff adjustments, the higher international aluminum prices will stimulate the increase in exports. The balance of supply and demand in the market will not change too much due to changes in tariff policies, but there may be short-term imbalances. The phenomenon exists. In fact, China’s impact on China’s exports of primary aluminum has already been manifested in the export tax rebates of non-ferrous metals, the reduction of export tax rebates, and the change in the tax increase process for exports. In January-August 2006, China’s net exports of primary aluminum decreased by 35% compared with the same period of last year. It is expected that after the export tax increase for primary aluminum, the import and export volume of primary aluminum in China may decline further, but the space for decline is not Great.
Overall, China’s export tariffs on non-ferrous metals by 15% will have little impact on net imports of copper, nickel, and other products, while products such as primary aluminum that are still net exports will have an impact for a certain period of time, but the actual impact The effect is merely to increase the cost of circulation, and thus does not have a substantial influence on the trend of aluminum prices. Increasing the cost of trade can often drive prices higher. Last Friday, the rise in international aluminum prices has been reflected in China's increase in export tariffs, but it may have a negative impact on domestic aluminum prices, but such impact is also limited. Due to the tight supply and demand situation of global primary aluminum supply and demand, it is expected that the aluminum price volatility will continue to be the main tone in the coming months.

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