On Friday, November 15, China’s finance ministry declared its plan to reduce or cancel export tax concessions for a wide range of commodities, including aluminium. As per the report, the measure will be effective from December 1, 2024.
Image Source: Made-in-China
For certain products like refined oil, photovoltaics, batteries, and non-metallic items, China has decided to reduce tax rebates from 13 to 9 per cent, while for aluminium and copper products, the country will cancel the concession.
Following the news, aluminium prices soared in China as tax rebates would cover more than 5 million tonnes of metal exports worth RMB 17.7 billion. Analysts suspect that with this measure coming into effect, aluminium selling prices will increase further. Today, as of November 15, the metal price has already heightened by RMB 210 per tonne to RMB 20,850 per tonne.
Aluminium is a key material used in the manufacturing, construction, and automotive sectors, and China is the highest supplier of the metal worldwide. The limited possibility of capacity expansion for aluminium production in other countries, coupled with heavy demand, will lead China to shift tax costs to overseas buyers by increasing the metal prices.
In London, aluminium prices jumped more than 7 per cent at around 1200 GMT. This announcement also heightened the share prices of aluminium companies located outside China. For instance, Norsk Hydro shares rose 7.3 per cent in Oslo and Rio Tinto jumped 1.9 per cent in London.
This decision could also be seen as a strategic move in the background of trade tensions fuelled by Trump’s win in the US 2024 presidential election. It may even create room for trade negotiations with the United States.
Edited By: Debanjali Sengupta
