[SMM News] VAT dropped by 3% Shanghai zinc back structure showed significant changes

Li Keqiang: reduce the current tax rate of 16 per cent in industries such as manufacturing to 13 per cent this year

SMM, 5 March: value added tax (VAT) in the overnight market is expected to increase. At the second session of the 13th National people's Congress (NPC) today, Premier Li Keqiang of the State Council said in a report on the work of the government that deepening VAT reform has reduced VAT by 3 percentage points. The structure of zinc back in Shanghai showed obvious change.

According to SMM analysis, the reduction of VAT reduces the cost of forward contracts, resulting in forward prices far lower than spot prices, superimposed spot arbitrage space, and obvious changes in the back structure of Shanghai Zinc 0405 contracts. It has closed from 370 yuan / ton yesterday to around 450 yuan / ton at present. Well, judging from the market reaction, VAT is generally expected to be implemented in May.

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