China's removal of the two percent import tariff on refined copper has made overseas purchases of the metal attractive again for the country, Macquarie Group Ltd, said.
China has been importing refined copper from Chile tax-free since October 2006, which led to a difference in the premium that Chinese buyers were willing to pay for copper from Chile, Japan and South Korea, the bank's analysts wrote in a report obtained by Bloomberg News.
"The removal of the two percent import tariff could lead to an increase in imports from Japan and Korea, and a reduction from Chile, without increasing overall imports," Shanghai-based analyst Bonnie Liu said.
Meanwhile, the spread between Shanghai Futures Exchange and London Metal Exchange copper prices has moved back in favor of imports for the first time since early 2007, the analysts wrote.
Contrary to expectations, export duties on lead and zinc were left unchanged.
"Lead net exports declined significantly from June when the current export tax rate was introduced," the report said.
(Shanghai Daily January 8, 2008)