Molybdenum News Center

China Seen to Have Pushed Back Scrapping of Moly Export Taxes to May

Chinese authorities appear to have pushed back a widely anticipated cancellation of molybdenum export taxes to May 1 from January 1, market sources said Wednesday, December 17.

The country's Ministry of Finance on Tuesday released a detailed report on the tax revisions that would take effect January 1, which left the export taxes on all moly products unchanged.

The ministry had been widely expected to remove all the taxes on moly products from January 1 after the World Trade Organization in August ruled the country's export controls on rare earths, molybdenum and tungsten via quotas and taxes were illegal and demanded it abolish the measures by May 2015, market sources said.

A Japanese government official told Platts that WTO had mandated removal of export restrictions by August 2015, a year after the WTO ruling, but China has voluntarily committed to removal by May 2015.

"The speculation now is that Beijing will delay until the last minute to cancel these tariffs, which will be May 1," a market source in China said.

A second Chinese source confirmed hearing the same new deadline of May 1 from the market.

"The Chinese authorities may not have been able to finalize domestic moly mining taxes yet to control moly exports once the export taxes are gone and thus postponed the cancellation," he said.

Market sources said China's Ministry of Commerce has not released a 2015 export quota for moly exports.

China imposed export taxes and soon after export quotas in June 2007 to rein in the country's moly exports, which were deemed polluting and power intensive to produce.

The export taxes are set at 15% for moly concentrate, 15% for moly oxide and 20% for ferromolybdenum.

"We will continue to monitor Chinese government actions," said Norio Fujii, director of the Critical Metals Industry Office at Japan's Ministry of Economy, Trade & Industry.

Japan together with the US and EU filed a complaint to the WTO in March 2012 over Chinese export taxes. IMPACT SEEN ON NEAR-TERM SUPPLY, PRICES

A South Korean trader said he was surprised the moly export taxes would not be lifted January 1, given how widely it had been expected.

"This means that we may see higher moly prices in the global market for the first half of next year at least as no large quantity of legitimate Chinese supply will be appearing in the market," he said.

One Chinese trading house has offered to a Japanese trading house a long-term supply contract of Chinese-origin moly oxide, as the Chinese firm was very confident that the export tax was going to be removed in January.

"Some market participants may have to rethink where they are going to get their supplies and to whom they will sell, as one cannot expect increases in supplies from China," the Japanese trader said.

Some traders and consumers in India are continuing long-term contract talks with Asian sellers for 2015 supply. The China export tax news will benefit the suppliers, sources said.

Buyers seeking the lowest possible prices for smallest possible volumes on a term basis will have to revise their market outlook, said South Korean sellers in talks with Indian buyers.

In Asia, some trading houses were keeping low inventories on possibility of more supplies from China after the export tax removal.

"Last week, major South Korean steelmakers held buy tenders for January, and some trading companies, having sold to the steelmakers, may need to short-cover for January. There may be active spot trade in early January," said one South Korean trader.

Some buyers may be looking into supplies of Chinese ferromoly smuggled from China without paying the export tax, as Chinese domestic demand for ferromoly was expected to stay dull for the near term.

One Asian trader of untaxed Chinese ferroalloy, however, said smuggled ferromoly supplies will be limited. Ferromoly businesses are in small lots of 10-20 mt, and he would rather focus on bulk ferroalloys traded in 1,000 mt lots, he said.

Market participants also expressed concern that delaying the export tax removal could put more downward pressure on Chinese domestic moly concentrate and ferromoly prices.

Some mines in northern China were closing as current market prices were below production costs.

"Chinese government may be under pressure to remove export tax," said a South Korean trader.

A Japanese consumer said: "State-run Chinese mines are able to keep up with current price levels [of $9/lb] so the possibility of China importing moly [to make up for lost supplies resulting from mine closures] is limited."

"Chinese export tax removal is sure to happen... the real important issue is the market after the tax removal," he said.

"With the new Chilean mines coming on stream, prices are expected to fall," the consumer added said.

"Many Chinese mines, which are primary mines [producing only moly] will not be able to keep up with lower cost requirement. China may turn into a net importer of moly as a result."


More molybdenum product: http://www.molybdenum.com.cn
Tel: 0592-5129696 Fax：0592-5129797
E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.
Tungsten & Molybdenum Information Bank: http://i.chinatungsten.com
Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Price: http://www.chinatungsten.com

• < Prev
• Next >