(Adds tax bracket level in second paragraph.)
Dec. 16 (Bloomberg) -- China adjusted the sliding scale tax levied on cotton imports to increase the duty for cheaper shipments, the China Cotton Association said today, citing the Ministry of Finance.
The price ceiling for imports to be taxed at a maximum of 40 percent will be increased to 14,000 yuan a metric ton, up from 11,397 yuan a ton, according to the association. Shipments priced higher than 14,000 yuan will be taxed at a flat rate of 570 yuan a ton, it said.
“The change is partly aimed at ensuring cheap imports don’t compete with local cotton because imports are now much cheaper than local produce,” Fu Xiaoyan, an analyst at Nanhua Futures Co., said by phone from Hangzhou today.
Cotton for May delivery on the Zhengzhou Commodity Exchange gained 1.4 percent to 20,650 yuan a metric ton by 10:19 a.m. local time. March-delivery cotton on ICE Futures U.S. in New York rose 1.4 percent to 86.29 cents a pound yesterday.
Still, “the change in the formula seems to have little impact for now because the lowest import price is much higher than the benchmark 14,000 yuan a ton,” Dong Shuzhi, vice general manager of PKU Founder Commodities Group, said from Urumqi today.
Imports in November reached 378,200 metric tons, almost triple from a year earlier, cncotton.com said, citing customs data. The website is owned by the China National Cotton Reserves Corp., which manages state stockpiles.
--Feiwen Rong. Editors: Richard Dobson, Jake Lloyd-Smith
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