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Copper Scrap Consumption Reduced by Increased Taxes at Government-Subsidized Copper Processors

iconDec 7, 2009 13:16
Source:SMM

SHANGHAI, Jul.6 (CBI China) -- In late June, the State Administration of Taxation, Ministry of Finance and Civil Affairs Bureau announced taxes will be increased for government-subsidized companies, most of whom are copper processors consuming copper scrap.  The tax increase took effect on July 1st, and CBI believes the increase will impact copper scrap and refined copper markets in the following ways:

1) The subsidized enterprises impacted are primarily processing copper rod or anode copper products, and profit margins should be reduced due to the tax increase.  As a consequence, many enterprises will cut or halt production.

2) Scrap supplies should exceed downstream demand in the near term as domestic consumption is falling faster than imports.

3) Intermediate product manufacturers will turn from scrap to refined copper as the spread between refined and scrap prices is widening. 

4) Falling copper rod supplies will likely cause increased demand for copper clad aluminum rods.

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