China's new rules may hit imports of metals from countries like India. Recently, China's ministry of finance announced new measures to limit export of processed goods, discourage investment in low-value-added products and ease the trade surplus.

This announcement is expected to have a significant effect on Chinese metal imports. It will try to limit exports on more processed goods in the second half of 2007.

Over 1,800 types of commodities, including copper, lead, zinc and cloth, are added to the category. Importers will have to deposit half of their payable levies (including import duty and VAT) at the customs when they import raw materials.

The deposit will be remunerated following the re-exports of the finished products within three months. The new deposit system will be effective from August 23, although existing export contracts will continue until October 23.

Under the tolling agreements, metal fabricators can import the refined metal duty-free if it is for processing into semi-finished products including rod, bar and profile for re-exports.

Otherwise, these imports are subject to 2-3 per cent (2 per cent for copper and 3 per cent for lead and zinc) import tariff and 17 per cent VAT.

The announcement, it is widely expected, will have an effect especially on copper.

Some are expecting a jump in refined copper imports in July and August because fabricators may rush to export their finished products before the imposition of the deposit system effective in October this year.

According to government statistics, during January-June 2007, Chinese copper imports accounted for 33 per cent of total imports of 895,000 tonnes.

In 2006, 440,000 tonnes of copper were bought under the tolling agreement, accounting for 53 per cent of total imports.