SHANGHAI Mar. 25 (CBI China)--Most Ports in China Refuse to Export Non-Standard Aluminum Tubes and Pipes
Since March 2008, most ports in China have refused to export non-standard aluminum tubes and pipes (hollow casting) together with standard aluminum tubes and pipes' HS code, which enjoys a 13% export rebate.
Since early 2008, market rumors have reported the Central Government would cancel export rebates for aluminum tubes and pipes, and possibly impose export taxes on those products. Following Chinese New Year, an urgent notice on export rebate policy for older as well as long-term trade contracts was released by the Central Government. Analysts speculate this could signal further adjustments to the government's export rebate policy. Sources report that the Central Government will specify which aluminum tubes and pipes can receive export rebates, instead of the current policy of canceling the 13% export rebate on all aluminum tubes. Exports of low value-added aluminum tubes and pipes are expected to be effectively restricted.
CBI predicts any official document concerning restriction of aluminum tube and pipe export will be released before July 2008.
Exports of aluminum bar and rod (pure aluminum rods) reached a peak in the first half of 2007, followed by a plunge midway through the year as China cancelled export rebates for these products, and instead imposed a 15% export tax on them. Meanwhile, exports of aluminum pipes soared beginning in October 2007, with growth rates over 240% and 160% in October and November, respectively, and with exports during December reaching over 40kt.
Aluminum Semis Exports Replace Refined Aluminum
The Chinese Central Government has implemented a strict export policy on products resulting from high-energy consumption, resulting in severe pollution, and those products consuming large amounts of raw materials. The government also adjusted export rebates for refined aluminum and low value-added aluminum semis products.
In 2005, China cancelled the 8% export rebate for primary aluminum and instead imposed a 5% export tax, which was subsequently increased to 15%. This caused net exports to fall during 2007 to the level of 50kt/month. Refined aluminum was exported in the disguised form of aluminum semis. China became a net exporter of aluminum semis from 2006, with exports reaching 116kt in 2007. Major aluminum semis exports include aluminum extrusions (including bar and rod), aluminum foil, and aluminum tubes and pipes. In August 2007 and in January 2008, a 15% export tax was imposed on aluminum bar and rod, and aluminum alloy bar and rod. According to the chart, exports of aluminum rods and bars in August 2007 were 10kt, down 70% M-o-M. Currently aluminum tubes and pipes enjoy a 13% export rebate. In December 2007, exports of aluminum tubes and pipes were 40.5kt, 11 times greater than the same period in 2006 years, so it is believed aluminum pipes and tubes are exported in place of aluminum ingots.
Export of Non-Standard Aluminum Tubes and Pipes Restricted, Putting Downward Price Pressure on Domestic Aluminum
Exports of non-standard aluminum tubes and pipes are expected to be restricted by the Central Government in July 2008, and an expected oversupply of 40kt/month of aluminum ingots will find its way into the domestic market supply. If this new restrictive policy is implemented in July, which is already a seasonal low demand period, aluminum prices are expected to fall.