In beginning of Jun’18, General Administration of Customs, the department under Chinese Government responsible for smooth functioning of international trades, arrested total 245 suspects in special action towards cracking down smuggling of ferrous scrap which was being exported to South East Asian countries illegally without paying 40% export duty.
The preliminary investigation showed around 2.4 MnT of ferrous scrap was involved in illegal exports which amounted to the worth of RMB 4.8 Billion (USD 750 Million). Mr. Yuangaofeng, the deputy director of Huangpu Custom smuggling suppression department Shatian branch said about this that the suspicious companies knew very well about the real transaction price but they deputed Custom clearing agent to declare low prices for export in order to evade 40% customs duty.
Why are scrap exports from China turning difficult ?
1.Chinese govt. wants to strengthen finances and secure tax revenues for promoting qualitative transition centered on distribution. This might keep Chinese scrap export volumes minted in near term.
2. In order to increase account transparency by activating transactions through corporate accounts which were earlier done through personal accounts.
What is the new policy all about ?
On 25 Jun’18, China introduced a new policy which would be effective from 01 August’18, which has got approval of the General Administration of Customs. The customs declaration form has been updated with a newer version to increase the overseas collection and delivery personnel column. At the same time, bank settlement and payment will be strictly carried out in accordance with the consignees and consignors in paper information such as customs declaration , of bills landing.
Chinese ferrous scrap exports skyrocketed in 2017 – The country surprised the whole world last year for its skyrocketed scrap exports. During CY17, China’s ferrous scrap exports summed up to 2.23 MnT as against minor ferrous scrap exports during CY16. Over a concern of environmental issues, China had closed down obsolete induction furnaces resulting in increased scrap export volumes.
While the country exported 162,690 MT ferrous scrap in Q1, 2018 witnessing sharp plunge of 81% Q-o-Q as against 840,938 MT ferrous scrap exports in Q4, 2017. Vietnam imported highest comprising 54% share in total Chinese ferrous scrap exports in Q1’2018. Followed by other South-East Asian countries like Indonesia (26%), Malaysia (5%) Japan (5%), Thailand (4%) and India (3%) respectively.
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