Chinese companies squeezed by electrolytic manganese export tariff

Unforged manganese, manganese scraps and powder, some other kinds of manganese and products made of manganese were put in Promulgating Catalog of Commodities under Administration of Export License, according to the latest announcement by the Ministry of Commerce and General Administration of Customs.

This is another policy adopted by the government to regulate the industry of electrolytic manganese, following the 15 per cent export tariff on unforged manganese that began on Nov. 1, 2006. At the present, price of electrolytic manganese are surging, with a lot of contract-breaching on the market. And at the same time manganese companies are finding ways to export electrolytic manganese without paying the tariff. smm.Com.Cn

The export tariff levied since Jan. 1, 2006 heats the market of electrolytic manganese a lot. At the beginning, the buyers and sellers could not reach agreements on the prices of electrolytic manganese and this made lots of signed contract with the goods unshipped called off. But with the new year approaching, many buyers were starting to accept the prices which are raised from 1260-US$1280 per ton (FOB) to 1500-US$1550 per ton (FOB). 有色金属行业网站 www.smm.cn

Since Dec. 2006, the domestic prices of electrolytic manganese are surging again, because the supply of it are insufficient, especially the supply from Huaheng of Hunan and Xiushang of Chongqing, which are the top two source of manganese. Domestic sellers lift their prices to 1750-1800 US dollars pre ton (FOB) but the buyers abroad did not accepted them. The market depressed again. An analyst from Umetal.net notes that Chinese sellers may raise their prices again with the administration rules specified and the battle on prices will start again. 

According to the statistics of China customs, the production and exports of unforged manganese are affected seriously since Nov. last year. Many enterprises stopped exporting and the volume of manganese exports and the number of export enterprises decreased a lot. Unforged manganese exports in November is 2.4 tons and US$31.68 million, down by 2.7 per cent and 12.9 per cent year on year. Many large producers in Hunan province (the main place in China the manganese exported come from) stops exporting in November. For instance, Eastern Manganese Group Co. Ltd, once the top manganese export enterprise under administration of Changsha Customs, with a production capacity of 3500 tons had done no exports in Nov.

Nowadays, breaching contract in manganese industry is very popular, because plenty of companies would gain nothing, if they carry the original contract out. Such as, the contracts with shipping date after Nov. 1 about 70 per cent of which cannot be performed as prescribed. Many small enterprises with incapability to execute the contract breached them. Only a few huge enterprises performed their contract, protecting their enterprises' reputation.

Besides raising their prices, many companies try to haven the tariff in producing manganese. There are mainly two ways to avoid tariff: One is to export manganese as manganese and aluminium alloy. They first produce pure electrolytic manganese and then blend the manganese and aluminium together, which contains 85 per cent of manganese, 15 per cent of aluminium, in a way of forging them into some shapes. When they declare customs, they use such names as manganese and aluminium, manganese and aluminium additive, manganese and aluminium briquette, and so on. In this way, they get 13 per cent tax reimbursement tariff free. So such exporting is expanding quickly.

Another way is to export manganese in the form of manganese-iron alloy. In the process of producing manganese, they add iron to manganese, which makes the manganese contain only 4-5 per cent of iron. In clearing customs they use the name of manganese-iron alloy and they only pay 10 per cent tariff. Foreign buyers are likely to accept it because of its higher purity.