The global aluminum market got a big shock when China announced it would stop its tax-breaks on semi-made aluminum exports: market prices went crazy with Shanghai going down and London going up
Chinese producers who make more than 5M tons of aluminum stuff each year (like bars tubes and sheets) will lose their 13% tax-break starting Dec 1st. The copper industry will also feel this hit but its not as big-time as aluminum - copper exports are way smaller at about 700k tons yearly
Many small-scale producers in Chinaʼs over-crowded metal-making business depend on these tax-breaks to stay alive; their factories run at low levels - sometimes just 40% of what they could do. Some companies wont make it through this change: its like what happened with steel makers a few years back when they lost their tax-breaks
- Trade fights with Europe about car taxes
- Donald Trumpʼs threat to put huge taxes on Chinese stuff
- Problems with solar panel trade
- Battery industry issues
The reasons behind this move are pretty clear - Beijing wants to keep more aluminum at home because:
1) They cant make much more metal due to their 45M ton limit
2) They need lots of it for green-tech stuff like solar panels and e-cars
3) Trade problems with other countries are getting worse
This change means the world aluminum market is splitting up into different regions - each with its own rules taxes and barriers. Western metal makers who closed down because of low prices might get another shot; but everything depends on how hard this hits Chinese companies