China could Add Export Tariff on Zinc and Lead

Chinese government considers increasing export tariff on lead and zinc for 2008. The government could increase the tariff by 5 percentage points to 15% for lead and add 5% tariff for zinc export, according to Japanese source. The country apparently tries to reduce the export to secure domestic resources. Chinese government added 10% tariff on lead export since June. The government already decided to cancel 5% value added tax return for high grade zinc export effective on January 1, 2008. With 5% new tariff, the zinc export price could increase by around 10%. The potential higher tariff has no impact on the market so far. Chinese suppliers try to liquidate zinc stock before the tax return cancel. The additional supply reduced zinc price at Shanghai Futures Exchange pressuring on price at London Metal Exchange. LME lead price also decreased to US$ 2,990 per tonne at settlement on Tuesday, which was the first drop to less than US$ 3,000 in 2 months. The market has no positive factor when Mount Isa smelter of Australia summed the operation after 2 months idling due to fire accident. Lead and zinc market has uncertainty as other metal market. Japanese trading firm source said Chinese lead with 10% export tariff is too expensive to import and the additional tariff has no impact on the attitude. The source expects Chinese domestic zinc price could decrease to the level without tariff due to oversupply.