The Hindu Business Line : China hikes tax on export of metals, oil

The country is clearly concerned over huge increases in energy consumption following significant large investments that have flowed in recent years into metals (base and industrial metals) and other sectors that consume high amounts of energy.

Last Friday, China's Ministry of Finance announced that export taxes would be raised from November 1 on a range of metals, as well as petroleum and steel, as part of a clampdown on over-investment in energy-intensive industries and at the same time, ease imports.

Metals covered are nickel, copper anode and copper scrap, and primary aluminium as well as a range of steel products. The export tax on primary aluminium will be raised from five per cent to 15 per cent, but no change in the tax treatment of alloys and semis was announced.

According to experts, this move would accelerate the shift into export of these products instead of primary products. The world base metals market has already taken cognisance of the development and prices have begun to firm up.

The latest measures provide support to the ongoing rally in aluminium prices.

If prices touch $3,000 a tonne before the end of the year, it may not come as a surprise. Simultaneously, import duty on alumina (raw material for the aluminium industry) was cut from 5.5 per cent to three per cent.

The measure could hit Chinese domestic alumina prices.

The Chinese Government also imposed a 10 per cent export tax on 30 items of steel primary products including ferroalloys, pig iron and steel semis. At the same time, China will decrease the import tax on coal and oil from 3-6 per cent previously to 0-3 per cent. A five per cent export tax has also been introduced in coking bituminous coal and coke and semi-coke.

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