Dec 23 (Reuters) - * Bonded delivery plan starts Dec. 24 on copper, aluminium
* Takers pay trade prices minus taxes for bonded delivery
* Scheme set to make arbitrage trades smoother
(Adds details, background)
HONG KONG, Dec 23 (Reuters) - Shanghai Futures Exchange will start a plan on Dec. 24 that will see copper and aluminium in bonded warehouses in China used for delivery against contracts, the exchange said on Thursday.
Appointed bonded warehouses would accept warrant business from March 16, 2011 for copper and aluminium stocks.
The warranted materials are required to be exchange-registered brands, it said in a statement.
The new scheme is expected to make easier arbitrage trades between the Shanghai and overseas exchanges such as the London Metal Exchange, thanks to freer flows.
Bonded stocks are typically imported materials that have not paid a local 17 percent value-added tax and are stored in bonded warehouses in China, the world's top copper and aluminium consumer, and the leading importer of copper.
Here are bullet points for some of detail of the scheme.
- The delivery copper and aluminium stocks have to be in the exchange-appointed bonded warehouses in Yangshan bonded area in Pudong district, Shanghai. The exchange announced on Thursday it has appointed 2 bonded warehouses as the first patch of such warehouses.
- A delivery can include only bonded stocks, or only duty-paid materials, or both bonded and duty-paid materials.
- The price for bonded delivery is based on the exchange settlement price minus taxes.
- A taker of bonded delivery is responsible to pay taxes to the Customs when the materials are to be consumed in the Chinese domestic market.
To see the full Chinese statement, click, http://www.shfe.com.cn/docview/docview_11233593.htm
To see a Reuters Q+A for what the bonded stocks delivery means, click [ID:nTOE6B707F] (Reporting by Polly Yam; Editing by Ramthan Hussain)