HONG KONG: China is likely to keep giving tax rebates to exporters of semi-finished aluminium products this year to encourage the exports, removing an obstacle that slowed them last year, sources at producers said on Monday.
Last year,Beijingwas set to cut tax rebates on some products to 9 percent from 13-15 percent but put the plan on hold after growth in the exports sank in the second half due to expectations of the cuts and lower demand from theUnited StatesandEurope.
As with many Chinese products, exporters of semi-finished aluminium products received fewer orders in the first quarter of this year than a year earlier andChinachalked up its largest monthly trade deficit in at least a decade in February as export growth slowed, raising pressure onBeijingto help exporters.
"We are sure the rebates won't be cut this year," a trading manager at a large semi-finished aluminium products plant said.
He did not disclose the source of the information.
"There is always a reason for a policy change (inChina). There is no reason that the rebates should be cut this year," said Wen Xianjun, vice chairman of China Nonferrous Metals Industry Association, a think-tank forBeijing's metal policy.
He said the export market had changed from a year ago and last year's plan should not be activated this year.
In the first two months of this year, the world's top aluminium producer and consumer exported 400,000 tonnes of semi-finished aluminium products such as rods, profiles, plates and strips, up 7 percent year-on-year versus a 33 percent rise in the same months in 2011.
That comparatively low growth may change soon as exporters are keen to raise sales because domestic demand did not increase after holidays in January cut consumption, traders and producers said.
"Producers are watching prices closely and trying to get more orders," said a manager at a product manufacturing plant in the southernprovinceofGuangdong, adding that overseas buyers were seeking high-quality aluminium plate fromChina.
He said many Chinese producers would raise spot exports if London Metal Exchange aluminium prices rose above $2,300.
Benchmark three-month LME aluminium prices have risen 8 percent so far this year, and fetched $2,182 per tonne at 0704 GMT on Monday.
Traders said high premiums on primary aluminium ingots inAsiacould prompt Asian importers to buy more Chinese semi-finished aluminium products to replace ingots.