What is the specific effect of RCEP on the nonferrous metals market in China?

SHANGHAI, Nov 17 (SMM)—Ten ASEAN countries, China, Japan, South Korea, Australia and New Zealand signed the world’s largest trade agreement, the Regional Comprehensive Economic Partnership or RCEP, on November 15. The signing of RCEP is an important step for Asia-Pacific countries to uphold multilateral trading system and build an open world economy. It is of great significance to deepen regional economic integration and stabilise the global economy. The signing of RCEP marks a successful commencement of building an East Asia Free Trade Zone with the largest population, the most diversified membership and the largest development potential in the world. It also marks that, despite the appearance of anti-globalisation in the world, emerging countries are leading the pace of "re-globalisation" or "new globalisation". This is also the most significant achievement of East Asian economic integration over the past 20 years.

Industry insiders said that more than 90% of products will be exempted from tariffs after the RECP comes into effect and it could further increase to 95% in the future, according to the Futures Daily. In fact, China and ASEAN have already established a Free Trade Area and have reached some trade agreements. But the signing of RCEP represents higher level and larger scope of openness in trades of goods and services and investment, as the agreement also contains chapters of intellectual property rights, e-commerce, competition, SMEs, economic and technological cooperation and government procurement. Furthermore, China and Japan have made historical breakthroughs, reaching bilateral tariff reductions for the first time.

So what is the specific effect of the signing of RCEP on the nonferrous metals market? SMM has made a summary. 

Nickel: RCEP may likely to have little effect on the nickel market as China is a net importer of nickel with extremely low tariffs. But given the high prices of nickel cathode, small price adjustments will still attract market attention. Whether the tariffs for electroplating-grade nickel cathode imported from Japan would decrease from 1% to 0 in the near term will be monitored by SMM. With import tariff at 2%, China only imports a small amount of nickel sulphate currently. Indonesia has possessed the largest nickel resources in the world, and is likely to extend its industry chain from MHP to nickel sulphate and ternary precursor in the coming years. However, it is not advisable to import battery-grade nickel sulphate directly due to transport issues and relatively lower production costs in the domestic market.  

Tin: The signing of RCEP will help to promote trade facilitation in the region. Most of China's seaborne tin raw materials come from Myanmar, with only a small amount from Laos, Malaysia, Russia and Australia. RCEP will barely influence China’s tin ore import as current import tariffs for tin ore sand and concentrate have already stood at zero, but the signing of the agreement is favourable to the home appliance and semi-conductor sectors. 

Iron ore: The signing of RCEP will reverse previous concerns of shrinking iron ore imports from Australia amid the tensions between the two countries during that time. 

Stainless steel: Many of stainless steel export-oriented downstream users may benefit from RCEP. However, demand from most of the countries in the agreement is not as strong as that from the Europe and the United States. Therefore, benefits brought by the agreement to stainless steel downstream sectors will materialise at a slow pace.

Besides, effects on other nonferrous metals such as copper, lead and zinc will not be too big as well.