SMM Analysis on Impact of Adjustment to Aluminium and Aluminium Alloy Export Tariffs in 2023

SHANGHAI, Dec 30 (SMM) -  On December 29, 2022, the Customs Tariff Commission of China’s State Council announced that the import and export tariffs on certain commodities will be adjusted from January 1, 2023. In order to promote the transformation, upgrading and high-quality development of related industries, the export tariffs on aluminium and aluminium alloys will be raised. 
From January 1, 2023, the provisional duties on primary aluminium under HS codes 76011010 and 76011090 will be cancelled, and an export tariff of 30% will be imposed on them instead. From 2021 to 2022, products under HS code 76011010 (unwrought non-aluminium alloy with Al content at and above 99.95%) were subject to the provisional duties of zero. China exported 8.65 million mt of unwrought non-aluminium alloy with Al content at and above 99.95% in the first 11 months of 2022, up 67.3% YoY. The levy of 30% export tariffs is likely to lead to a decline in exports of such products.  The 15% provisional duties on products under HS code 76011090 (traditional primary aluminium ingot products) will be replaced by a 30% export tariff from 2023. According to customs data, China exported 186,691 mt of unwrought non-aluminium alloy with Al content less than 99.95% from January to November 2022. There will be no adjustments to other aluminium products, with the export tariff unchanged at 20%, and the provisional duties in 2023 at zero. 

SMM believes that the adjustment of export tariffs will have limited impact on supply and demand. China's primary aluminium export window is difficult to open. LME aluminium outperformed SHFE aluminium in H1 2022 amid overseas output cuts, allowing the export window to briefly open. However, primary aluminium exports fell back noticeably over the past five months, with the monthly export volume less than 3,000 mt over the past three months. As the export tariff hike from 15% to 30% from 2023 will push up the export costs of primary aluminium, primary aluminium exports are likely to fall. At the same time, it will also be more difficult to export high-purity aluminium. Aluminium semis will still dominate the exports of aluminium products. The long-term impact is still worthy of market attention. The export window is unlikely to open, unless overseas aluminium prices trade at much higher premiums over the domestic prices.