US waste is subject to a 25% tariff, how will other foreign waste paper and base paper markets change?
One night of reversal, the US waste was first included in the list of China's tariffs on US goods. On August 8, the Ministry of Commerce said that China has decided to impose a 25% tariff on US$16 billion from US imports and implement it in parallel with the US. In this list, solid waste has become a large category of products, and waste paper is unfortunately listed.
According to estimates, after the addition of 25% tariffs, all grades of US waste will rise to more than $300/ton. In the medium and long term, this policy will inevitably lead to a series of chain reactions. The most obvious change is: from the US waste to the European waste, the daily waste, and then to the national waste, the original paper, all prices may show an upward trend!
01
China imposes a 25% tariff on US waste, and the US waste market is worse.
On the evening of August 8, the Ministry of Commerce said that the US decided to impose a 25% tariff on the US$16 billion Chinese exports to the United States from August 23, and once again overriding domestic law over international law is a very unreasonable practice.
In order to safeguard its legitimate rights and interests and the multilateral trading system, the Chinese side had to make the necessary counter-measures and decided to impose a 25% tariff on US$16 billion from US imports and implement it in parallel with the US.
It is worth mentioning that the basic principle of China's levying different tariff rates on the United States is that the tariff rate for taxation is relatively low for products that have a greater impact on production and life and are less alternative. Most of the list of 20% and 25% tariff items on the US and Canada is a product with greater elasticity of substitution and a greater dependence on the Chinese market.
Unlike the list 2 attached to the announcement issued on August 3, this list includes all categories of waste paper imports: 47071000, 47072000, 47073000 and 47079000.
After the addition of 25% tariff, the cost of purchasing US waste from paper mills will increase by US$60-70/ton. Regardless of other factors, the price of all grades of US waste will generally rise to more than $300/ton.
Compared with the national waste market price in the same period, the average price of A-grade yellow paper from the national level in the first six months was about 2,624 yuan/ton, and the average price of old newspapers to the factory was about 2,837 yuan/ton. After the tax increase of 25%, the price of US waste ONP and OCC is basically the same as the domestic waste price.
02
US waste plus tax 25%, European waste, daily waste, national waste, raw paper prices are affected
Considering the strong influence of Chinese buyers in the US waste market, Chinese paper mills may appropriately lower the US domestic purchase price to offset some of the tariff losses. The actual tax increase cost may be shared by US suppliers and Chinese paper mills. US waste procurement costs will still likely continue to be lower than national waste costs.
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