7 March
Singapore,
Dow Jones

SINGAPORE (Dow Jones)-Exports of aluminum tube products are being denied tax rebates at two Chinese ports, shutting down some of the flow of aluminum tube exports out of the country, traders said Friday.

Customs officials at the ports of Lianyungang in Jiangxu province and Qingdao in Shandong province, home to China’s greatest concentration of non-state-owned aluminum producers, have rejected applications by companies to claim a 13% tax rebate for exports of aluminum tubes and are imposing a 15% export tax instead, said traders.

"Customs have stopped the exports," said a senior trader at an international trading house in Shanghai.

Officials in the port of Lianyungang are taking the view that aluminum tube products should be declared as primary aluminum ingots, which receive a 15% export tax, and not as aluminum tube exports, said the trader.

The officials there have decided aluminum tube exports are "a circumvention of regulations."

One South Korean company is reported to have 12,000 metric tons of aluminum tube exports being held up in the port of Qingdao, said a trader in Seoul.

China’s central government last July ended tax rebates for exports of aluminum rod, bars and several other products as part of its goal to reduce exports of energy-intensive and polluting products. Earlier in December 2006, it imposed a 15% tax on exports of aluminum ingots.

However, the government didn’t cancel the 13% tax rebate on aluminum tube exports, opening up a tax loophole for aluminum producers.

Instead of pouring aluminum ingots, producers have been casting primary aluminum in the shape of tube to avoid the export tax and claim the rebate.

China’s aluminum tube exports have rapidly increased since then, rising from 7,000 tons in July to above 50,000 tons in December.

The action taken by customs officials in these ports will likely hasten a decision by the central government on whether aluminum tube exports should continue to receive tax rebates, said the Shanghai-based trader.

Friday, the three-month aluminum contract was trading at $3,211/ton on the London Metal Exchange at 0224 GMT, up $5 from the Thursday afternoon kerb.