"Reverse Invoicing" Topic Rekindles Heated Discussions: What Are the Dynamics of Secondary Rod Plants? [SMM Analysis]

Recently, the "reverse invoicing" policy has once again become a focal point of industry discussions, sparking widespread speculation about whether this policy will be fully implemented in the future. To gain deeper insights into the views of secondary rod plants on this policy and their future expectations, SMM communicated with enterprises across multiple regions. The key points of these discussions are summarized as follows:

From market feedback, enterprises' reactions to the "reverse invoicing" policy show significant diversity. Although most enterprises have heard that the policy is expected to be officially implemented starting January 2025, they all indicated that they have not yet received specific local execution documents.

In terms of regional differences, Anhui province has required enterprises to at least partially implement "reverse invoicing" since April, but the specific execution varies by region. For instance, certain areas in Anhui have enforced stricter inspections on "reverse invoicing" since September, while other areas, due to strong wait-and-see sentiment, have prohibited enterprises from operating. Currently, secondary copper rod enterprises in Anhui that are operating normally report that a certain proportion of raw material procurement has already adopted "reverse invoicing," with production mainly affected by tight supply of raw materials. If the policy is fully implemented in the future, enterprises express willingness to actively comply, but specific operational details remain unclear.

Enterprises in Hubei and Sichuan provinces stated that the subsequent implementation of the policy remains uncertain. Considering the potential market turmoil in early January and the upcoming Chinese New Year, they plan to suspend production for a few days in January to mitigate risks. In Jiangxi province, one of the regions most affected by the "reverse invoicing" policy previously, enterprises have yet to receive specific notifications. Regarding the policy's implementation, enterprises expressed confusion and uncertainty.

Based on SMM survey results, most enterprises across regions generally adopt a wait-and-see attitude. If the "reverse invoicing" policy is fully implemented in 2025, the actual tax burden on secondary rod plants is expected to increase by at least 1.5%, up to approximately 1.9%. Enterprises found by tax authorities to still be using "unofficial receipts" for accounting purposes will face tax collection equivalent to 2% of their revenue. Regardless of the handling methods during the transition period, this poses significant pressure on secondary rod plants. Some enterprises have already taken measures to address potential cost increases by lowering upstream copper scrap prices. Most secondary rod plants plan to monitor market developments in early January to avoid potential risks.

Despite the many uncertainties in the market, enterprises are expected to maintain full-capacity production in December, and the overall market is likely to remain stable. SMM will continue to monitor the latest market developments.