China is considering scrapping its export quota and export tax on molybdenum after the World Trade Organisation found they breached its rules, Chinese industry sources said Monday, November 3.

The WTO's Appellate Body in August upheld an earlier finding that China's export restrictions on molybdenum, rare earths and tungsten breached WTO rules and could not be justified on environmental or conservation grounds.

"We think the possible abolition of the moly export quota and tax to be related to WTO's move," a moly trader in southwest China said.

"If eventually the export quota and export tax policy were abolished, this may spur some moly traders to resume exports," she added.

China imposes a 20% export tax on ferromoly and 15% tax on moly oxide and has set a total annual export quota of 25,000 mt for 2014, 2013 and 2012.

China's Chamber of Commerce of Metals, Minerals & Chemical Importers in late September held talks with the EU, the US and Japan, which were challenging Chinese export restrictions, and with 18 Chinese moly exporters, to examine the issue, the Ministry of Commerce said in a report in October.

While dropping the export restrictions could prove positive for China's moly sector, Chinese industry sources said whether this would result in a surge in exports would depend on future market fundamentals.

"At current prices, even without the export tax, Chinese domestic moly prices are still higher than international prices," an industry source close to key Chinese moly producers said.

"At present, demand for moly in both China and overseas isn't very good, so we have to wait and see upcoming market supply and demand to see if the China factor will have any significant impact on the international moly market," she added.

China exported 1,472 mt of moly oxide over January-September, up 96% year on year, General Administration of Customs data showed.

Source: Platts