One of the complications of publishing data from China’s official sources is that one never can be sure of the accuracy of the data. GI-GO applies in China at least as much as it does anywhere else in the world*.
I have received comments from people in the last month or two that the prices showing in our reports always seem lower than what the market is actually paying. That’s bad news for the traders and their clients. The client thinks he has been over-charged, and beats up on the trader.
The data we reproduce is from Customs Dept, but we have been worried that maybe there’s a wrinkle somewhere between the commercial contract and the Customs declaration. And we have found one.
Anodes were until very recently subject to a 15% rebate. The good folk in China’s Customs Dept knew this and assumed (rightly or wrongly) that the prices being presented to them were slightly inflated, in order to extract a few extra RMB out of the Government. So they would each month conduct their own review of the market to establish what the price would have been back when the contract was written. They then used this information to adjust the entry price.
The effect of this action (apart from stopping rorting of the rebate) has been to insert a time delay of a couple of months in the pricing picture. The prices we quoted for June’s exports, for instance, are more likely to have been accurate for March or April. Conversely, should the market price turn down, we aren’t likely to see this in the Customs data until 2 – 3 months later.
We understand that the practice will continue for at least several more months, despite the rebate stopping, partly because some suppliers are still eligible for the rebate. I suspect the gap between contract prices and reported prices to close after the new year.
So if you have been beating up on your anode supplier based on the information we published, best to find some other subject to beat him up about!
* GI-GO = Garbage In – Garbage Out.