China's largest tin producer receives permission to carry out processing trade

SEATTLE (ITRI.CO.UK): On April 20th this year, Yunnan Tin Company (YTC), the largest tin-producing company in China, received sole permission from the Ministry of Commerce of the People's Republic of China to carry out the processing trade of tin concentrate.

The policy, which was officially announced by YTC on Monday, means the company can buy tin concentrate from abroad without being charged tax by the Chinese government, providing refined tin produced from the concentrate that is imported under the policy is sold to foreign markets.

ITRI View: Under the current system, it is understood that exporters are unable to reclaim the 17% VAT when exporting tin from China. This VAT factor underpins the current price dynamic between China and LME prices but would not be present under the new tolling arrangement. It will be another month or two before YTC can implement this policy, but its introduction is expected to result in at least a short-term rise in Chinese exports and a rebalancing of pricing, with LME prices falling and China prices rising. In contrast to the global tin market, China is currently in a state of oversupply with some stock built up in Q1, which is also likely to encourage exports once this barrier is removed.

Courtesy: www. itri.co.uk