SMM, November 18, 2024: On November 15, 2024, the Ministry of Finance issued the "Announcement on Adjusting Export Tax Rebate Policies."
The appendix detailed the aluminum-related HS codes affected by the cancellation of export tax rebates, totaling 24 codes. Among them, aluminum extrusion involves 76042100, 76042910, and 76042990. According to data from the General Administration of Customs, from January to September 2024, the cumulative export volume of domestic aluminum bar, rod, and extrusion reached 803,900 mt, while the aluminum extrusion affected by the rebate cancellation totaled 800,900 mt, accounting for over 99%. That is to say, almost all aluminum extrusion will be stripped of tax incentives.
Currently, according to SMM, with only half a month left before the policy takes effect, some enterprises may rush to meet deadlines for exports, but due to the short time frame, the increase will be limited. Subsequently, there may be negotiations on processing fees and delays in shipments. Additionally, after the cancellation of China's aluminum extrusion tax rebate, overseas aluminum billet processing fees may rise. If the price spread between domestic and overseas markets returns to a reasonable range, some enterprises indicated that the trade mode of export processing with supplied materials might increase.
SMM Brief Comment: Before the implementation of this announcement, most domestic aluminum semis export products enjoy a 13% export tax rebate policy. For many years, due to policy incentives and the product advantages of Chinese aluminum semis, Chinese aluminum semis have always had a competitive edge in overseas markets with high quality and low prices. In the short term, the cancellation of the aluminum semis export tax rebate may increase the export costs for aluminum semis export enterprises to some extent, suppressing the export enthusiasm of Chinese aluminum processing enterprises. In the medium and long-term, as China is an important global exporter of aluminum semis, there is a certain supply and demand gap for overseas aluminum semis. In the absence of corresponding supply increments overseas, the reduction in China's aluminum semis exports and the increase in export costs can both push up overseas aluminum prices, widening the price spread between domestic and overseas markets. Without considering exchange rates, the export profits of domestic aluminum semis may rebound, regaining relevant advantages, thereby restoring the medium and long-term export volume of Chinese aluminum semis. Moreover, with limited growth in overseas aluminum semis production, Chinese aluminum semis still have good opportunities abroad, and the tax cost will also be passed on to the overseas buyers. Of course, the cancellation of the aluminum semis export tax rebate does not involve high-value-added aluminum products, which will also stimulate domestic aluminum export enterprises to develop towards exporting high-value-added products.
