China stopped refunding export taxes on aluminium and copper on December 1, 2024. For processors, the cost is easy to count. One example from XTransfer puts aluminium processors’ income at 27,709 yuan per metric ton, 2,859 yuan of it the 13% rebate. Take the rebate away and that income falls, unless prices adjust.
The rebate system exists to let exporters recover taxes paid on inputs used in goods they ship abroad. That improves cash flow, cuts costs and makes Chinese products cheaper overseas. Cancelling it for 59 items, copper and aluminium products among them, was aimed at overcapacity.
The numbers explain the worry. The smelting sector works under a government capacity cap of 45 million tons, and output is close to it. Mid-stream aluminium processing has too much capacity, with utilization often below 65%. Keeping more metal at home, XTransfer says, also helps secure supply for clean energy technologies.
Other rebates cut the same day
A separate change lowered the VAT rebate rate from 13% to 9% on 209 products, including refined oil, photovoltaic products and batteries. XTransfer describes this as part of an effort to curb exports of polluting, energy-intensive goods.
Exporters face higher costs and lower volumes on aluminium and copper, with smaller firms hit hardest because they have less room to absorb the extra expense. Refiners are expected to ship less gasoline, gasoil and jet fuel, which would tighten the Asian market and could raise prices.
The source also notes that companies are spreading production to Vietnam, Malaysia and India, and some are moving closer to home, with facilities in Mexico and Eastern Europe.
