The rate of VAT in the east Asian country applicable to manufacturers will be lowered from April 1 by 3 percentage points, to 13%, with the intention of stimulating China’s slowing economy.
The tax cut should have no noticeable effect on prices in any particular sector once it has been fully implemented, because it will apply equally throughout the supply chain, according to a ferro-chrome supplier to China.
“The VAT cut means that everyone is paying less. It’s a full circle and it should have no effect on prices, but it will free up cash-flow and increase liquidity. It’s a stimulant,” the source told Fastmarkets.
In the meantime, different parts of the market have said that the reform will support their industries.
There have been reports that buyers of ferro-chrome will reduce their price bids in response to the stimulus, while chrome and manganese ore suppliers have argued that their customers could absorb higher...