China is likely to keep giving tax rebates to exporters of semi-finished aluminum products in 2012 to encourage the exports, removing an obstacle that slowed them last year.
In 2011, Beijing was set to cut tax rebates on some products to 9% from 13-15% 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 the United States and Europe.
As with many Chinese products, exporters of semi-finished aluminum products received fewer orders in the first quarter of 2012 than a year earlier and China chalked up its largest monthly trade deficit in at least a decade in February as export growth slowed, raising pressure on Beijing to help exporters.
China Nonferrous Metals Industry Association said that there is always a reason for a policy change (in China). There is no reason that the rebates should be cut this year. They 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 2012, the world's top aluminum producer and consumer exported 400,000 tonnes of semi-finished aluminum products such as rods, profiles, plates and strips, up 7% year-on-year versus a 33% 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.
Product manufacturing plant in the southern province of Guangdong said that producers are watching prices closely and trying to get more orders, adding that overseas buyers were seeking high-quality aluminum plate from China.
They also said that many Chinese producers would raise spot exports if London Metal Exchange aluminum prices rose above $2,300. The three-month LME aluminum prices have risen 8% so far in 2012.
Traders said high premiums on primary aluminum ingots in Asia could prompt Asian importers to buy more Chinese semi-finished aluminum products to replace ingots.
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