China likely to try to keep its copper production home

From Interfax News Agency
Monday, April 16, 2007

http://www.interfax.cn/displayarticle.asp?aid=23256&slug=CHINA-METALS-CO...

SHANGHAI -- China is likely to impose stricter controls on copper and copper product exports in the next few months to curtail the current trade surplus and reorganize the copper industry to serve mainly the domestic market, a top official from the China Nonferrous Metals Industry Association said.

"The government is concerned by the high trade surplus that has risen over the last two months. As the domestic copper industry has not followed government suggestions to focus more on serving domestic demand rather than on overseas exports, the central government is considering cutting or canceling all copper product export tax rebates in the next few months. However, an implementation date has not yet been set," vice-chairman of the China Nonferrous Metals Industry Association, Wang Gongmin, said at the 2007 Copper & Aluminum Summit Meeting held in Shanghai on Saturday.

The CNMIA is lobbying the government to retain copper product export tax rebates of at least 1 percent so as to grant copper fabricators a six-to-12-month buffer period to rearrange their production and export systems, Wang said.

"If export tax rebates are canceled, the government is likely to impose an export tax on copper products," he commented.

With the exception of copper tube, China's copper product export tax rebates were reduced from 13 percent to 5 percent on Sept. 15, 2006.

Refined copper exports are currently taxed at 10 percent. Wang warned that the government is very likely to increase the export tax to a maximum of 30 percent.

To further control copper and copper product exports, copper tolling (importing copper concentrate and re-exporting refined copper under favorable tax rates) was prohibited last November.

The Chinese government is planning to further restrain copper product tolling (importing refined copper and re-exporting semi-finished products) by charging value-added tax (VAT) on copper exports. VAT would be repaid after the product is re-exported.

China exported 559,100 tons of copper products last year, up 20.61 percent from the previous year, with 85.23 percent of which being copper foil and tube exports.

China will produce between 3.27 million and 3.30 million tons of refined copper this year, up between 9 and 10 percent from last year. The annual growth rate will drop slightly from that of 10.92 percent between 2005 and 2006, Wang predicts.

Wang also forecasted that domestic consumption of refined copper will increase to 4 million tons this year, up from 3.8 million tons last year.

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