background

On December 15, the Tariff Commission of the State Council issued the notice of the Tariff Commission of the State Council on the tariff adjustment plan in 2022. In terms of MFN tariff rate, the provisional import tariff rate will be implemented for 954 commodities (excluding tariff quota commodities); from July 1, 2022, the provisional import tariff rate for products expanded by 7 information technology agreements will be cancelled. In terms of export tariff rate, the export tariff will continue to be implemented on 106 commodities such as ferrochrome, and the export tariff on 2 commodities such as phosphorus and crude copper other than yellow phosphorus will be increased.

Data source: customs, Tianfeng Futures Research Institute

In terms of import tax rate, there is no change between 2021 and 2022. The import tax rate of most copper related commodities is still zero, the domestic demand for copper resources is still large, and the domestic self-sufficiency rate is low. Therefore, the import of some copper related products is encouraged.

In terms of export tax rate, there is basically no change between 2021 and 2022. The only variable is unrefined copper and copper anode for electrolytic refining (tariff No.: 74020000), and the provisional export tax rate is blank. This means that the export tax rate will be implemented according to the export tariff of 30%, which is twice the export tax rate of 15% in 2021.

Reason of appearance

From the export items of customs tariff number alone, the total export of this commodity will be 66 tons in 2020 and 122 tons in January October 2021. Such volume will not cause too much water spray in the market.

However, we need to pay attention to two problems: first, theoretically, China is a net importer of copper ore, crude copper cold material and refined copper. If such goods are exported, they are generally used for RMB interest spread arbitrage of a small number of enterprises. However, there has always been pressure for RMB appreciation in recent years, and the sustainability of such goods in the later stage remains to be observed; The second question is whether the so-called unrefined copper and copper anode for electrolytic refining announced by the customs are the traditional anode plates in our copper industry chain. We pay attention to other forms including copper and refined copper, and do not exclude that some special-shaped copper is defined as unrefined copper and copper anode for electrolytic refining by the Customs at the time of export. Assuming such a situation exists, we can turn our attention to the export of copper products.

Data source: China Customs, Tianfeng futures

In 2020 and 2021, China's copper exports will be 538300 tons and 559300 tons respectively (the statistical data of 2021 is up to October). According to the data released by the National Bureau of statistics, the proportion of copper exports in the total domestic output will be about 2.63% and 3.3% in 2020 and 2021.

Data source: SMM, Tianfeng futures

Deep causes

*National attitude

Of course, whether the export tariff number is anode plate or copper in the traditional sense, in essence, it is from small to large, which represents the state's attitude towards copper itself - that is, in fact, it does not support the export of copper or copper products in the next few years. So, what is the reason for this move?

Our country itself is a large copper demand country. Although its domestic output accounts for about 40% of the world, these output is far from enough for domestic copper consumption, and not all domestic copper smelters have the conditions for their own mines. Most of the copper raw materials or refined copper depend on foreign imports.

Data source: Tianfeng futures

However, from the import data released by the customs this year, except that the import volume of copper concentrate raw materials remained stable, the import of anode copper and refined copper decreased significantly year-on-year.

Data source: China Customs, Tianfeng futures

On the one hand, the global epidemic has not been solved, and the soaring sea freight makes the transportation itself and containers in short supply. On the other hand, the change of global economic pattern is also becoming a possible risk of copper import in the later stage.

Source: Shanghai Shipping Exchange

According to the latest data released on the official website of Shanghai Shipping Exchange, The latest China import container freight index (cicfi) was 1408.82, down 0.6% month on month. Of course, not all route freight rates are falling. According to the data of Shanghai Shipping Exchange, there are five major import routes in China. Compared with the previous period, freight rates of three routes fell, of which the Mediterranean route, down 1.8%, the western US route, down 1.6%, and the eastern US route, down 1.3%. However, other routes Freight rates are still rising, including 0.2% for European routes and 5.1% for Australia and New Zealand routes. In addition to the freight price, the quantity of containers is also one of the core issues of supply and demand. Overall, China's import route capacity and container supply are on the rise.

On the other hand, interest rates are now rising again in several trade channels, including Asia to the United States. It can be seen from some figures that the ultra-high transportation cost has not been alleviated. According to the latest data, the Drury world container index, a comprehensive index of major global routes, rose 2.3% last week to US $9262 per 40 foot equivalent unit, up 170% year-on-year. By the last week of October, the index had never been so high. The Shanghai container freight index (SCFI) shows a more bullish model for sea carriers. The SCFI global composite index continued to climb after a slight decline in October and just reached an all-time high, rising 1.8% last week and 2.7% the previous week. According to the latest news, due to the continuous congestion and delay in the west American port, large ships cannot return, and the number of suspension of the west American route continues to rise. At present, the LA and LB ports in the west American port are blocked for an average of 20-25 days, some routes are longer, routes are reduced, and sea freight charges rise.

From the local situation, the epidemic situation is still difficult to be substantially solved in the short term, and the later stage is approaching Christmas abroad and the domestic Spring Festival. With the advent of the traditional peak season, it is difficult for the shipping price to fall in a short time. In other words, even if the sea freight rate will not rise further, it will maintain a high level in the short term, which will have a great impact on commodity imports next year.

*About anode copper

There are about 100 anode copper smelters in the world, with a production capacity of about 10 million tons, and the import and export trade volume of anode copper in the world is about 2 million tons. China is an important importer of anode copper in the world.

From the perspective of refined copper raw materials, the import of copper concentrate can generally be carried out through open-air transportation by ship, but different from copper concentrate, anode copper, red copper ingot and recycled copper need to be transported by container. It is reported that a large number of containers and ships will be delivered around may 2022. It remains to be seen whether the sea freight will decrease at that time. However, before that, if there is no good solution for container transportation, the import of cold materials is still facing challenges.

*The possibility of copper concentrate and cold material shortage increases

According to SMM data, the self-sufficiency rate of domestic copper mines in China is only about 20%, and this proportion may continue to decline with the decline of taste caused by perennial mining of self owned mines and the closure of some mines. This also means that nearly 80% of China's copper concentrate will continue to rely on imports.

From the perspective of China's smelting enterprises, the proportion of primary copper and recycled copper as refining raw materials is basically maintained at 28%. According to the monthly average of this year, the import volume of anode copper and red copper ingot mentioned earlier as one of smelting raw materials has a year-on-year basic impact of about 15-20% and 2-3%. If there is indeed a decline in cold material supply according to the expected impact, the theoretical value of the annual impact on domestic smelting output should be 100000-150000 tons. This impact is basically the same as the new downstream copper consumption estimated in our previous annual report.

Data source: SMM, Tianfeng futures

conclusion

In any case, the future import of copper raw materials, refined copper and copper products will face certain risks. In order to avoid this risk, the export volume is bound to be restrained, mainly for self-produced and domestic use. This trend may last for several years.

Article from - Changjiang nonferrous metals network