(Bloomberg) — Chinese battery shares fell after Beijing unveiled a plan to reduce some export tax rebates, while South Korean materials companies advanced.
Contemporary Amperex Technology Co. led the drop with a decline of as much as 4.8% in onshore trading Monday, among the worst performers on the MSCI China Index. Its smaller peers including Eve Energy Co. and Gotion High-Tech Co. also slid more than 4% at one point.
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China announced a rejig of its value-added tax rebates on hundreds of export products starting from April. Such discounts on 22 battery-related goods will be cut to 6% from 9%, with a complete removal planned from 2027.
“The decline in Chinese battery stocks today appears to be a knee-jerk reaction,” said Gary Tan, portfolio manager at Allspring Global Investments LLC. “Investors view it as an early signal of tighter oversight on overseas battery shipments, a key demand driver last year.”
The measure comes as Beijing steps to rein in the exports of some goods, including battery-related items, as trade tensions with partners such as the European Union remain intense despite a tariff truce with the US. It could add pressure to the battery sector at a time when China is already urging the industry to curb excessive capacity expansion and avoid cutthroat competition.
Lithium, meanwhile, extended its recent rally on Monday, aided by expectations of a potential rush of battery-related exports ahead of the April policy changes. The most-active lithium carbonate futures rose by the 9% limit on the Guangzhou Futures Exchange to 156,060 yuan ($22,372) a ton. Share of producers including Tianqi Lithium Corp. and Ganfeng Lithium Group Co. surged as much as 6% in Shenzhen.
“The latest policy should open a potential front-loading export window during the year,” analysts at Citigroup Inc. wrote in a note.
Some observers pointed to limited impact of the tax changes to CATL, the world’s biggest electric-vehicle battery-maker, given the company’s stronger pricing power and scale advantages. The policy may potentially be more challenging to tier-two manufacturers.
“Smaller players have historically leveraged the higher VAT refund to implement aggressive low-pricing strategies to win ESS orders,” analysts at Morgan Stanley wrote in a note, referring to energy storage systems. The lower rate will leave them exposed to margin compression and competitive pressure, they added.
Shares of South Korean battery-materials makers, on the other hand, rose as Beijing’s policy move narrowed the cost advantage of the Chinese companies. Ecopro BM Co. and POSCO Future M Co. each gained more than 6% on Monday.
Meanwhile, Beijing also said it will cancel export tax rebates on solar cells, a move that lifted the shares of major Chinese solar companies. Trina Solar Co. surged as much as 11% in Shanghai, while Jinko Solar Co. followed with gains of up to 7.8%.
The removal of such rebates was expected by the industry and will help accelerate industry consolidation by eliminating less efficient players, ultimately benefiting industry leaders, according to a separate note from Citigroup.
–With assistance from Ocean Hou and Lin Zhu.
(Updates with Chinese solar companies’ shares from the 11th paragraph.)
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