Aluminium prices have risen the most in more than a year due to the recent announcement by China's Finance Ministry to end export tax exemptions on aluminium and copper products. This decision pushed prices up by more than 8% to $2,730 per tonne.

This decision of China will take effect from December 1, 2024 and may reduce Chinese aluminium exports. This move may reduce world supply and increase prices. This is a positive for Indian aluminium companies like Hindalco Industries Limited, Vedanta Limited and National Aluminium Company Limited.

What are Chinese export tax exemptions?
China's export tax exemptions are essentially government subsidies, which reduce the tax burden on exported goods. This made Chinese aluminium more competitive in international markets as the tax exemptions allowed Chinese exporters to sell their aluminium at lower prices.

This made it more attractive to foreign buyers. By cancelling these exemptions, China is effectively making its aluminium exports less competitive. What will be its impact? Talking about the positive points, China ending its export tax exemptions may increase global aluminium prices, which may benefit aluminium producers outside China. This could also increase demand from other aluminium-producing countries and boost domestic production and consumption of aluminium products in China. On the downside, higher prices could lead to higher costs for aluminium-consuming industries such as auto, construction and packaging. It could also lead to potential supply shortages, given China's key role in the global supply of the metal. How will Indian companies benefit? China's decision to revoke export tax exemptions could significantly impact three Indian companies.

• Hindalco Industries: The company is one of the largest aluminium producers in India and could benefit from increased global demand and potentially higher prices.
• Vedanta Limited: Vedanta is another major player in the Indian aluminium industry through its subsidiary Vedanta Aluminium. It may also benefit from higher global prices and increased demand.
• National Aluminium Company Limited (NALCO): NALCO, a government-owned company, can benefit from the growing domestic demand for aluminium and potential export opportunities.