China announced that the export tax rebate for Aluminium and Copper products will be withdrawn with effect from December 1, 2024.
Earlier, exports of Aluminium and Copper in China were eligible for a 13% tax rebate.
China’s aluminum industry historically has exported significant amounts of the metal as semi-finished products, which are used in value-added manufacturing or simply re-melted into commodity-grade shapes.
The move resulted in LME Aluminium prices jumping as much as 8.5% on Friday, before ending with gains of 5.5%.
China’s Aluminium exports stood at 5.7 Million Tonnes (MT) in calendar year 2023. For the first 10 months of this calendar year, shipments increased by 17% from last year to 5.5 MT and they are likely to end the year at 6.6 MT.
Chinese Aluminium exports represent 15% to 16% of the country’s total production and 20% to 22% of production outside China.
The shipments of the metal used in everything from beer cans to automobiles have been a trigger point for trade battles with the US and Europe in the past, with smelters shuttering across the globe due to excess supply, low prices and high energy costs.
“This could be seen as a strategic move in the context of trade tensions following Trump’s win in the US presidential elections,” said ING Bank NV commodity strategist Ewa Manthey.
This move from China could further support Aluminium prices starting December as exports from the country are expected to decline.
For Vedanta, Aluminium is the second biggest metal that forms its business, following Hindustan Zinc.
For Hindalco, Novelis comprises of a majority of its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), followed by the India Aluminium business.
Aluminium is the biggest component for NALCO, followed by Alumina.
Shares of NALCO are down 6% over the last one month, while those of Vedanta and Hindalco have declined by 10% and 17% respectively over the same period.
(With Inputs From Agencies.)
