London 25/07/2016 - China's Ministry of Commerce (Mofcom) has approved three more copper smelters - Zhejiang Jiangtong Fuye Heding Copper, Henan Yuguang Gold & Lead Group and Chifeng Yuntong Nonferrous Metals - for tolling agreements, it said on its official website.
Imported copper concentrates are normally subject to a 17-percent value-added tax on the copper price while, after being processed domestically, copper cathodes are liable to a 5-10 percent export tax. But the tolling agreement provides smelters with tax rebates, lowering smelters' costs - especially valuable in a low-price environment.
The move could also assist Chinese copper smelters in exporting cathodes should domestic demand worsen - smelters with agreements already in place have been exporting copper cathodes to LME-listed warehouses elsewhere in Asia this year due to low domestic premiums and favourable warehouse incentives.
"Smelting capacities have increased a lot during the past few years - these approvals could also help divert the stock surplus to the overseas market," a trader in Shanghai said.
China imported 13.29 million tonnes of copper ores and concentrates in 2015, up 12.6 percent from 2014 due to favourable treatment charges and refining charges (TC/RCs).
Sources expect total imports to climb in 2016 while the increased number of smelters with tolling agreements should result in higher exports of copper cathodes should domestic demand remain tepid.
Mofcom approved Dongying Lufang Metals and Zijin Copper for tolling in April and May respectively this year.
Its previous approvals date back to 2009. Eight other smelters - Jiangxi Copper, Tongling Nonferrous, Yunnan Copper, Jinchuan, Daye Nonferrous, Baiyin Nonferrous, Zhongtiaoshan and Xiangguang Copper - have had tolling agreements since that year.
(Editing by Mark Shaw)