The Chinese Ministry of Finance announced last Friday that, starting on December 1, China will abolish the export tax rebate policy for metals such as aluminum and copper.
As the world’s largest producer of non-ferrous metals, China plays a critical role in the global non-ferrous metals market. The implementation of this policy will alter the cost structure for companies exporting aluminum and copper products and will also impact the global supply and demand dynamic.
However, this tax rebate cancellation affects 94% of China’s aluminum product exports and 50% of its copper product exports, meaning it will have a greater impact on aluminum.
Data shows that the 24 aluminum products covered by this policy accounted for approximately 4.62 million tons in export volumes from January to September 2024, which represents 99% of China’s total aluminum product exports during the same period. In contrast, during the same time frame, the export volume of affected copper products was 521,200 tons, only 3.2% of China’s total copper product output.
In May 2023, Mr. Roland Hill, Managing Director of FYI Resources Ltd. (ASX: FYI; OTCQX: FYIRF, FSE: SDL), was interviewed by METALS 100, during which he elaborated on the development progress and the significance of a strategic acquisition. FYI is focused on critical mineral project development and is positioning itself as a major producer of high-purity alumina (HPA). The company has optimized the commercialization phase of its flagship HPA project and has entered downstream rare earth production through the acquisition of Minhub Operations Pty Ltd.
That said, the significance of this move by China goes beyond just the two metals at hand—it signals a fundamental shift in policy direction. In addition to aluminum and copper, the Chinese government has also decided to lower export tax rebates for industries like photovoltaics (solar energy) and batteries from 13% to 9%.
Meanwhile, Donald Trump is about to take office as President of the United States, and his proposed “Tariff 2.0” policies could introduce further uncertainty into the metals market. If Trump’s tariff threats materialize—such as imposing a blanket 10% or 20% tariff on all imports into the U.S., or at least a 60% tariff on all Chinese imports—it will undoubtedly escalate trade tensions, potentially leading to economic slowdowns.
Ewa Manthey, a commodity strategist at ING, suggested that China’s cancellation of export tax rebates might be a strategic response to the expected trade frictions after Trump’s ascension to the presidency. She pointed out that through this policy, China may be demonstrating its ability to influence global markets, possibly using this as leverage in future trade negotiations.
A recent report from Goldman Sachs highlighted that Trump’s election increases risks to their mid-term bullish base case for copper and aluminum markets. Their base case predicts that copper prices could rise to $11,000 per ton and aluminum prices could reach $2,900 per ton by the second half of 2025. However, if the global economy is negatively affected by U.S. tariffs, the recovery in these markets could be delayed.
