The Ministry of Finance and The State Administration of Taxation Canceled Export Tax Rebates for Copper Semis, Future Copper Foil Exports to Face Impact [SMM Analysis]

On November 15, 2024, the Ministry of Finance and the State Administration of Taxation issued Announcement No. 15 of 2024, stating the following regarding the adjustment of export tax rebate policies for products such as aluminum semis:

1. Cancel export tax rebates for aluminum semis, copper semis, and chemically modified animal, vegetable, or microbial oils and fats.

2. Reduce the export tax rebate rate for some refined oil products, PV, batteries, and some non-metallic mineral products from 13% to 9%.

3. This announcement will be implemented from December 1, 2024. The applicable export tax rebate rate for the products listed in this announcement will be determined by the export date indicated on the export goods declaration form.

Copper foil and copper-clad laminates for printed circuits are included in the list of products for which export tax rebates are canceled.

According to data from the General Administration of Customs, from January to September 2024, China's export volume of refined copper foil without backing (thickness ≤0.15mm) (HS code 74101100) and other refined copper foil with backing (thickness ≤0.15mm) (HS code 74102190) totaled 32,500 mt, up 1.38% YoY; of which Ordinary Trade accounted for 67.62%, and Processing with Imported Materials accounted for 23.64%.

From January to September 2024, China's export volume of refined copper-clad laminates for printed circuits with backing (thickness (excluding backing) ≤0.15mm) (HS code 74102110) totaled 71,700 mt, up 7.16% YoY; of which Ordinary Trade accounted for 90.10%, and Processing with Imported Materials accounted for 5.33%. According to an SMM survey, it is roughly estimated that copper foil accounts for about 30% of the copper-clad laminates.

Below is the historical change in China's export tax rebate rates for copper products:

1. 2006: The export tax rebate rate for copper semis was 13%.

2. September 15, 2006: The export tax rebate rate for most copper semis was adjusted to 5%, with some at 8%.

3. December 1, 2008: The export tax rebate for copper pipe & tube (HS codes 7411101900-7411290000) was increased from 5% to 9%.

4. April 1, 2009: The rebate rate for copper pipe & tube (HS codes 7411101900-7411290000) was increased to 13%.

5. July 15, 2010: The original 5% export tax rebate for 21 types of copper semis was canceled.

6. January 1, 2015: The export tax rebate for 10 types of copper semis was increased to 9%, and for electronic copper foil to 17%.

7. May 1, 2015: The State Council canceled the export tariff on aluminum semis, encouraging processing enterprises to expand exports.

8. April 1, 2019: According to the export tax rebate rate inquiry, the export tax rebate rate for various copper products such as coiled copper-tin alloy (bronze) and other copper-zinc alloy (brass) plates was 13%.

9. November 15, 2024: The Ministry of Finance and the State Administration of Taxation issued an announcement canceling the export tax rebates for aluminum semis, copper semis, and other products from December 1, 2024.

China's copper foil is mainly exported to Southeast Asia. The cancellation of export tax rebates will increase the cost for enterprises by 13%. For China's copper foil industry, which has already been facing severe overcapacity issues in recent years, the copper foil processing fee hovers around the cost line. If costs increase further, copper foil enterprises will have no profit. SMM expects enterprises to shift to other trade modes or negotiate with upstream and downstream parties to share the costs. This will also make enterprises in Japan, South Korea, and China Taiwan more competitive compared to those in mainland China, and China's copper foil exports will face impacts in the future.