[SMM Analysis] how does the implementation of VAT reduction in Manufacturing Industry on April 1 affect Copper Enterprises

SMM, March 15-in response to questions from Chinese and foreign reporters, Premier Li Keqiang said: this year, we are determined to reduce taxes and fees on a larger scale. The rate of value-added tax and unit social security contributions will be reduced, and the tax reduction and dividend reduction will be nearly 2 trillion yuan. The value-added tax will be reduced on April 1 and the social security rate will be reduced on May 1, which will be rolled out in an all-round way. This measure will not only stimulate consumption, but also enhance the profits of manufacturing enterprises, drive their core competitiveness, and play a greater role in boosting domestic economic development.

Judging from the SHFE disk, as soon as the news came out, the contract price gap between 1903 and 1904 for Shanghai Copper widened rapidly. in fact, by the middle of this week, the market had different opinions on the tax reduction, and the contract price spread gradually widened from 150 yuan per ton on Monday to about 600 yuan per ton. As soon as the news of the tax reduction in the morning was confirmed, the price spread widened rapidly to 1040 yuan per ton. However, according to the tax reduction rate of 3 points to calculate, Shanghai copper every other month price difference is expected to reach nearly 1100 yuan / ton, the price difference has now basically met expectations.

The widening of the price spread plays an important guiding role in the current spot quotation in the market. Generally speaking, the contract price will gradually approach the next month's contract near the delivery date, but because of the policy of reducing value-added tax, The spread between the 1903 contract and the 1904 contract widened by more than 1000 yuan / ton on the delivery date, so that the quotation for the 1904 contract in the spot market today has reached the high water price of 1000 yuan / ton-1000 yuan / ton.

From the enterprise side, the subsequent reduction of value-added tax will reduce the production cost of the enterprise, will stimulate the enthusiasm of the enterprise to take goods; In the near future, the country has also continued a large amount of capital investment, to a certain extent, will also support the improvement of terminal consumption, the subsequent price is expected to strengthen.