Al price ratio down due to VAT rebate cancellation

摘要

The aluminum price ratio between Chinese market versus to overseas has been falling in recent weeks due to the expectation that the VAT refunds for aluminum exports and processing trade for alumina imports will be removed in the near term. The price ratio of the SHFE to the LME has recently declined to around 8.6 from 9.3 in the past few months. For example, the ratio of SHFE 0502 Al futures price to SHFE 3-month contract was 15,920yuan/US 1,840 dollars =8.65 on November 26. The cancellation of the VAT refunds had a great influence on the aluminum price ratio, said Mr. Wang Feihong, senior aluminum analyst with Antaike. He made a detailed analysis on the price ratio change. Chinese government in October 2003 cut the VAT rebate to 8 percent from the previous 15 percent. As a result, the price ratio had fallen to around 9.3(benchmark) with the upside of 10.4 and downside of 8.8. The ratio used to be around 10.2(benchmark) with upside of 10.6 and downside of 9.8 over the past years when the rebate was 15 percent.