China's gold ore and concentrate imports have seen a significant decline, falling 22.4% to 201,004.9 metric tons in September 2024, marking a six-month low. This drop is largely attributed to a proposed rule change by Chinese customs that could classify gold concentrate containing over 58% iron and sulfur as pyrite. If implemented, this classification would impose a 1% import tax and a 13% value-added tax (VAT) on these shipments, threatening billions in annual imports and potentially squeezing trading margins amidst a recent rally in gold prices [ea3bf3cb].
Traders are reportedly diverting shipments to circumvent the anticipated retrospective taxation, reflecting the uncertainty surrounding the new regulations. Chinese customs officials have not provided any comments regarding the proposed changes, leaving many in the industry on edge [ea3bf3cb].
The implications of these regulatory changes extend beyond gold, as they may also affect copper supplies from Peru, which could have a cascading impact on China's copper smelters. This situation highlights the interconnectedness of commodity markets and the potential ripple effects of regulatory shifts [ea3bf3cb].
Meanwhile, India's recent reduction of import duties on gold has led to a surge in demand, as the country seeks to stabilize its gold market amid global economic uncertainties. The Indian government has cut the import duty on gold from 15% to 6%, resulting in a notable increase in retail gold purchases and a decrease in prices by approximately 9% [07dc08c3].
As India capitalizes on lower import costs, the World Gold Council has observed increased activity in the gold options market, indicating a robust market response despite global volatility. The upcoming wedding season in India is expected to further boost gold demand, contrasting sharply with China's declining imports [07dc08c3].
In addition to the duty cuts, India has revised duty drawback rates for gold and silver, which benefits the gem and jewellery industry by allowing exporters to receive higher returns on duties and taxes paid for raw materials [5f323a3e].
The contrasting trends in gold imports between China and India underscore the dynamic nature of the global gold market, influenced by regulatory changes, economic conditions, and seasonal demand fluctuations [ea3bf3cb].