11 Jul 2007-China may cancel the current 5% import tax on primary aluminium to further encourage imports, an industry official told Interfax yesterday.

"I heard that the central government was discussing the feasibility of this policy with relevant departments. It is hoped that domestic enterprises will start to import more of this energy-intensive metal, which will further cool down overheated investment in China's aluminium industry," a senior China Nonferrous Metals Industry Association (CNMIA) official, surnamed Wen, said.

He added that while the policy might not significantly increase aluminium imports, it will be widely interpreted as a move by the government to throw its weight behind primary aluminium imports.   

China currently produces more primary aluminium than is required by domestic industries, and relies on exports to solve the surplus problem.

The government's previous attempt to restrain energy-intensive and high-polluting resource product exports and curb the huge trade surplus was to lift the export duty on primary aluminium from 5% to 15% on Nov. 1, 2006.

As a result, China exported 273,701 tonnes of unwrought aluminium (primary aluminium and aluminium alloy) in the first half of this year, plummeting 56.2% from the same period last year. Exports in June stood at 35,275 tonnes, dropping 23.62% from the May figure of 46,181 tonnes, according to preliminary statistics released by the General Administration of Customs yesterday.

Li Rongcan, director of the Ministry of Commerce (MOFCOM)'s finance department, commented that the government is currently studying which product imports need to be encouraged, including strategic resources, energy products, advanced technology and equipment, according to a report in the International Business Daily, a MOFCOM supervised newspaper.

The policy will probably be released at the end of July and is designed to help alleviate China's ballooning trade surplus and the appreciation pressure of the renminbi, according to the report.

In other news, China imported 2.66 million tonnes of alumina in the first half of this year, down 20.3% from 3.33 million tonnes seen during the same period last year, according to preliminary statistics released by the General Administration of Customs today.

Alumina imports in June amounted to 340,000 tonnes, according to GAC figures. Both alumina and aluminium markets in China have been in surplus in recent years due to a rapid expansion in capacity.

China imported 76,729 tonnes of unwrought aluminium (primary aluminium and aluminium alloy) and aluminium products in June and a total of 488,058 tonnes in the first half of this year, down 18.9% from the same six-month period last year.

Scrap aluminium imports reached 170,852 tonnes in June, and totalled 994,467 tonnes in the first six months, surging 29.3% year-on-year.

China exported 273,701 tonnes of unwrought aluminium in the first half of this year, falling 56.2% from the same period last year while the country exported 35,275 tonnes of unwrought aluminium in June, down 23.62% from 46,181 tonnes in May.

China lifted the export tax on primary aluminium from 5% to 15% on Nov. 1, 2006, in a move designed to cool investment in the aluminium industry, as well as alleviate the country's ballooning trade surplus.

Shanghai aluminium futures fell slightly, with the most active September contract falling RMB 40 (US$5.28) to RMB 19,620 (US$2,591.81) per tonne Wednesday.