Tax Rebate Cancellation Stalls China’s Aluminium Export Contracts for 2025

Nonferrous Metals Industry Association

China’s aluminium industry faces significant disruptions following Beijing’s decision to cancel a crucial 13% export tax rebate on aluminium fabricated products, as reported during an industry conference in Wuxi. This unexpected policy change, effective from December 1, has forced many Chinese producers to delay or renegotiate their 2025 export term contracts.

Immediate Impact on Export Strategies

In response to the announcement on November 15, Chinese exporters, who had not anticipated such a swift policy shift, are now scrambling to adjust. The elimination of the tax rebate has not only led to the cancellation of some contracts signed before the announcement but also complicated ongoing renegotiations. A Metalnomist trader highlighted that, despite the challenges, some producers have managed to secure a 10-13% increase in export prices with their buyers for the shipments scheduled before the rebate cancellation.

Long-Term Effects on Production and Market Dynamics

The removal of the tax rebate is poised to create considerable uncertainty regarding the launch dates of new production lines for aluminium fabricated products, originally slated for early 2025. With the altered economic feasibility, these lines might now face postponements or cancellations, as firms reevaluate their profitability without the rebate.

Furthermore, market analysts project a significant dip in China’s aluminium exports, with reductions estimated between 300,000 to 800,000 tonnes in 2025. This decline is expected to begin in early 2025, with a potential gradual recovery as the export arbitrage widens, thanks to anticipated adjustments in domestic and overseas prices.