China's Export Rebate Cut, and U.S. Tariff Proposals Set to Drive Base Metal Prices Up

The global base metals market is set to experience unprecedented price rise following China's decisive move to eliminate export tax rebates for Aluminium and Copper, coupled with potential new tariffs proposed by President-elect Trump.

China's Ministry of Finance has announced the termination of export tax rebates for aluminium and Copper, effective December 1^st. This policy shift is expected to impact global metal markets by artificially constraining supply and driving up international prices. The decision effectively increases the cost of Chinese metal exports, potentially rendering them less competitive while simultaneously protecting domestic manufacturers. By removing tax incentives, China is strategically repositioning itself in the global metals trading ecosystem, forcing international buyers to reassess their sourcing strategies and potentially seek alternative suppliers in other emerging markets.

The policy change has triggered significant stock market movements across Asia. Malaysian manufacturers have seen remarkable benefits, with Press Metal Aluminium Holdings experiencing a substantial stock price increase. LB Aluminium Bhd's shares jumped nearly 10%, while Indian Aluminium manufacturers like Hindalco, Vedanta, and NALCO have also witnessed positive stock performance. These market reactions underscore the profound impact of China's policy recalibration. The removal of tax rebates is expected to constrain Chinese Aluminium exports, forcing nations to seek alternative supply sources. Global market capacity to replace Chinese supply remains limited, creating a potential supply chain vulnerability. Manufacturers may be compelled to absorb increased production costs or transfer these expenses to end-users, potentially triggering a ripple effect across multiple downstream industrial sectors.

Simultaneously, President-elect Trump has proposed 25% tariffs on imports from Mexico and Canada, with an additional 10% tariff on Chinese imports. These sweeping trade measures could dramatically reconfigure global manufacturing landscapes. The proposed tariffs threaten to disrupt established supply chains, particularly in automotive and electronics sectors, where international manufacturers rely on intricate cross-border production networks. By imposing such substantial tariffs, the administration aims to incentivize domestic production, potentially forcing multinational companies to reevaluate their global manufacturing strategies and potentially relocate production facilities.

Moving forward, it is anticipated that Aluminium and Copper prices will rebound as a result of the intersection of these political and macroeconomic influences. Beijing's shock decision to terminate export tax rebates for Aluminium and Copper, combined with President-elect Trump's aggressive tariff strategy targeting Mexico, Canada, and China, is poised to trigger a drastic change in international metal trading dynamics. End-users in automotive, construction, and packaging sectors should prepare for potential raw material price increases. ChemAnalyst predicts an increase in prices, anticipating continued growth in Aluminium and Copper prices in the coming weeks.