China’s Nonferrous Metal Industry Association announced that the government should cancel the 17% value added tax on scrap imports. According to a report by Bloomberg, the move will help companies cut costs as the economy slows. The cuts would include both copper and aluminum.

The government has yet to decide whether or not to go ahead with the move.

According to the report, China’s industrial output grew at the weakest pace in almost a decade last month. Scrap copper imports have dropped by a third from March.

Mr Ruan Yinan an analyst at Shanghai Huida Investment Co said that "Scrap imports have shrunk so much that many traders in Guangdong have decided to take an earlier and longer holiday for the new year.”

According to customs, China’s scrap copper imports fell to 360,000 tonnes in November, down a third from this year’s high in March. The data showed that scrap aluminum imports were 140,000 tonnes last month down by 38% from the September high.

Mr Lu said that the association has also advised the government to lift restrictions on the tolling trade for scrap copper. Tolling is the tax-free import of raw materials for processing into export-bound products. But he didn’t give details.

The association advises the Chinese government on industry policies on behalf of companies including Aluminum Corp. of China Ltd., the largest producer of the metal in the country and Jiangxi Copper Co.

The Ministry of Finance said last week that China will reinstate a 17% value added tax on domestic recycled materials, including scrap metals from January 1, adding partial rebates are still in effect until 2010.(Source: SteelGuru)