Canadian aluminium producer Alcan Inc. (AL) expects Chinese aluminium producers' response to the rise in export tax to 15% to take "some months" to have an impact on exports, the company said Tuesday.
Friday, the Chinese government announced a rise in export tax to 15% from 5% for primary aluminium along with export tax hikes for other energy-intensive industries in order to curb growth.
"We expect the measures to take some months to take effect but they are consistent with past moves to slow exports and growth in aluminium production," Alcan said during its third quarter and nine months results presentation.
"Over time we're likely to see a slowdown in capacity additions," Alcan said.
Meantime, the smaller export tax increase for semifinished products to 13% from 11% would act as an incentive to increase exports of semi-fabricated products, Alcan said.
China's decision to raise export taxes could reduce the expected market balance for 2007. Alcan expects tight conditions to continue, with the market's balance somewhere between 200,000 metric tons deficit and 250,000 tons surplus, Alcan said.
"The balance of the market could come down but the Chinese have been very prudent, very cautious with their measures. It does seem that we will see a decline (in exports) over time," Alcan said.
China is the world's largest producer of aluminium.
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