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    Tax cuts drive aluminium billet processing fees to 3-months high

  • China Aluminium Network
  • Post Time: 2019/3/22
  • Click Amount: 217

    Shanghai Metals Market found processing fees for aluminium billet in Guangdong climbed to nearly three-months high this week as traders withheld from selling cargoes to await lower value-added tax rates.

    As on Monday, processing fees for φ90 aluminium billet in Guangdong were offered at more than RMB 500 per tonne. Monday, March 18, was the first trading day after Premier Li Keqiang on Friday, March 15, announced lower VAT cuts from April. On Friday, the offers were heard at RMB 400 per tonne. The aluminium billet processing fees, however, did not retreat on Tuesday and Wednesday.

    Aside from the imminent tax cuts, lower prices of spot aluminium in Guangdong than in Shanghai also kept billet traders in the southern market away from offloading cargoes that drove the hike of processing fees for billet. Recovering consumption was also a factor that played a key role in higher processing fees. South China is the home to many aluminium extrusion plants that use billets as raw materials.

    Extrusion plants in the south told SMM that they saw March’s orders significantly improve from February. New orders from aluminium extrusions steadily grew even as demand has yet to reach high-season levels.

    However, these processing fees will likely pull back after the tax cuts will come into effect from April 1, 2019. SMM remains bullish, on the other hand, on aluminium billet processing fees in the medium term.

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