China's VAT cut may widen SHFE Cu, aluminium futures contract price gap

摘要

China's plan to slash the rate of value-added tax on nonferrous metals is expected to widen the price gap between near- and long-term futures contracts traded on the Shanghai Futures Exchange, Chinese industry sources said. They said "long run" futures contract prices -- for example, those due to settle in early 2020 -- could be lower once the VAT cut is factored into production costs. This would be the case especially for copper, nickel, lead and zinc traded on the SHFE. Near-term contracts are those due in coming months. During the National People's Congress this week, China announced it would cut the VAT rate for nonferrous metals to 13% from 16% currently.