Japanese importers have raised concerns about the flow of untaxed ferrosilicon from China into the country, as the product which is sold at lower prices after evading tax hinders competition and impacts domestic producers, industry sources said Wednesday.

The Chinese government has a 25% export tax on ferrosilicon.

A trader at a Japanese company said he has requested for the local customs department to consider the impact of untaxedferrosilicon from China on the local industry.

The trader, who declined to be named, said he and representatives of other Japanese companies with similar concerns, had visited the Kobe regional customs office late last year. The purpose of the visit was to exchange views with local customs officials on day-to-day customs clearance issues.

 

The representatives from the various companies had highlighted the increased flow of lower-priced China-origin ferrosilicon imports into Japan from countries such as Vietnam, which have no ferrosilicon production, he said. Such imports are believed to be Chinese-origin material that have evaded the 25% export tax, he added. Details on the tax evasion were not provided.

The Kobe regional customs official told the company representatives that Japanese laws can't be enforced in Chinese tax evasion cases. Japan does not impose any import duty on ferrosilicon of any origin, and Japanese importers are not required to present certificates of origin for ferrosilicon imports.

 

The customs office in Tokyo also said that there was no means to control ferrosilicon imports as the product was duty-free.

 

"Rare earth imports are also duty free under the Japanese law, and do not require certificates of origin. Only China can control the flow of so-called tax-evaded materials, by strengthening border patrols," the customs official said.

Traders have been complaining about how the lower-priced material has affected their ferrosilicon business.

 

"In March, I heard a consumer's sale at less than Yen 120/kg delivered for 50-60 mt ferrosilicon," one trader said. The Yen 120/kg delivered is inclusive of a minimum Yen 10/kg for freight, customs handling and other charges. But Chinese sellers would not be able to breakeven at this level if the export tax is taken into account, he added.

According to market sources, ferrosilicon imports from China averaged $1,405/mt CIF Japan (Yen 115/kg) in the first-half of March, which would be Yen 125/kg or more if delivery and other costs were added.

 

Chinese market participants said that China-origin ferrosilicon which have evaded export taxes were believed to have been moved to Vietnam, and then re-exported, but details were not clear.

Separately, one Hanoi-based ferrosilicon trading company said he exports ferroalloy from China's Jilin and Liaoning provinces mainly to Southeast Asia, and he does not provide a certificate of origin to buyers and would only accept orders in small volumes. He declined to elaborate further.

Japan has imported a total 66,353 mt of ferrosilicon from 16 countries over January-February. Imports from China were 36,899 mt, valued at Yen 4.3 billion ($52 million), or Yen 116,000/mt. Imports from Vietnam were 1,437 mt, valued at Yen 150 million and averaging Yen 104,000/mt, according to customs data.