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SHFE copper backwardation widens after news of VAT cut
Mar 5,2019 11:20CST
industry newsprice review forecast
Source:SMM
The backwardation structure on the SHFE copper April-May spread widened to 600 yuan/mt as of CST 10:11 on Mar 5

SHANGHAI, Mar 5 (SMM) – Following the announcement of VAT cuts, the backwardation structure on the Shanghai Futures Exchange copper April-May spread widened to about 600 yuan/mt as of CST 10:11 on Tuesday March 5, compared to 70 yuan/mt at closing on Monday.

A tax cut will lower the costs for holding forward cargoes. This generated arbitrage opportunities and widened the backwardation structure.

China will cut the manufacturing VAT by 3 percentage points, Premier Li Keqiang said in work report at the annual National People's Congress on Tuesday.

The manufacturing VAT will drop from 16% to 13% while the VAT for transport and construction will be cut from 10% to 9%. 

Copper
Tax cuts

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