China may up rebates on exports of base metal products

* China may increase export tax rebates on nonferrous metal products * Tax changes on primary metals exports are unlikely * Copper tubes, aluminium profiles may get higher rebates By Polly Yam HONG KONG, Sept 16 (Reuters) - China, already the world's factory and keen to boost exports to solidify domestic economic recovery, may boost tax rebates on outflows of semi-finished and finished goods, including those made from nonferrous metals, during the next few months, industry sources said. Larger rebates on the local 17 percent value-added tax on exports of metal products could spur domestic demand for the metals by 2-3 percent in China, the world's top consumer of most base metals, said Heng Kun, analyst for metal industry at Essence Securities. "If China raises tax rebates on products exports, base metals products should be included," Heng said. Heng said Beijing was unlikely to have preferential taxes on primary base metals given that the government was discouraging exports of the energy-intensive metals. Wen Xianjun, vice chairman of the powerful government-picked China Nonferrous Metals Industry Association, said the industry body had been lobbying Beijing for full rebates of the 17 percent VAT on exports of aluminium products. "High-energy exports like primary aluminium metal should be controlled. For aluminium products, the exports should be encouraged," Wen told Reuters late on Tuesday. Beijing has already responded to the association's request with higher rebates on some aluminium products in the first half, such as a 13 percent rebate on aluminium profiles, which are used in construction. But Wen said a 13 percent rebate was still too low to make Chinese exports competitive abroad. "Our competitiveness in (aluminium) exports has fallen because of policy changes," Wen said, referring to China's rebate cuts on aluminium products in previous years. He added that reduced demand due to the global economic crisis and rising trade protectionism were also cutting into exports of Chinese aluminium products. COPPER TOO? Encouraging domestic firms to use more aluminium will help absorb some of the oversupply weighing on the Chinese market. And by offering tax rebates rather than directly subsidising producers, as it does in agriculture, for example, the government can avoid the kind of accusations of unfair trade that have triggered disputes over steel and tyres. The tyre manufacturers, now facing new import duties in the U.S., are also hoping for higher rebates. China increased tax rebates on commodity exports in April and June this year to help exporters and boost domestic consumption. It also cut many commodity export taxes in July. "Beijing may give a higher rebate on aluminium profiles," said a manager at an aluminium fabricating plant in Nanhai city in Guangdong province, who expected the rebate would rise to 15 percent in the fourth quarter this year. Beijing may also give a 5 percent rebate on exports of unwrought aluminium alloy ingots and alloyed aluminium billet, the manager estimated. Neither is currently subject to export tax or eligible for export tax rebates. The government is likely to consider raising tax rebates on exports of copper products such as tubes, a manager at a large tube producer said. "All copper products received 13 percent tax rebates before," the manager said. But now only a few copper products, such as thin copper tube, are eligible for the 13 percent rebate. Even ordinary copper tubes are only given 5 percent rebates as the product is classified as low-end, he said. But the manager predicted that even ordinary copper tubes could now be given a 13 percent rebate. In the first seven months of the year, China's exports of copper products fell 26 percent on the year to 247,664 tonnes, official data showed. Exports of aluminium products dived 42 percent to 660,000 tonnes. (Editing by Clarence Fernandez)