en.Wedoany.com Reported - The "Positive and Negative List for Taxpayer Compliance in Invoice Issuance" (referred to as the "Invoice Compliance List"), recently released by China's State Taxation Administration, is rapidly transmitting its impact to the commodity market. Zinc ingots, as one of the basic non-ferrous metal varieties, have seen their trading activity significantly suppressed, and circulation in the zinc spot market is notably obstructed. Since the latter part of the month, tax authorities in multiple regions have initiated corporate compliance inspections, leading to a significant reduction in the invoice quotas of trading companies in East China, South China, North China, and other areas, with some enterprises suspending operations as a result.

The implementation of this Invoice Compliance List primarily targets long-standing industry practices of invoice arbitrage and inflated transactions. In the past, some entities used the spread between structured deposits and bill discounting for financing operations, with special value-added tax (VAT) invoices playing a key evidentiary role. This quota tightening has largely brought such arbitrage activities in the zinc market to a halt. Furthermore, some localities previously attracted shell company registrations through tax rebates, creating book circulation cycles like "circular invoicing" and "mutual invoicing" without physical goods transfer. This cleanup has effectively squeezed out the statistical froth. Currently, trading volumes from arbitrage-focused traders have plummeted, while enterprises with genuine upstream and downstream relationships engaged in actual goods trade have seen relatively limited impact on their invoicing quotas. The zinc spot market is exhibiting a prominent characteristic of "goods available but no invoices," making the ability to issue invoices normally a core condition for transactions to be concluded.

Although zinc futures prices remain high and SMM zinc ingot inventories across seven major regions are at a four-year high, the comprehensive suspension of local tax rebates has somewhat elevated costs in the trading segment. Some enterprises have passed this change onto spot quotations, driving zinc ingot spot prices stronger month-on-month. In the short term, entering May, the related impacts of the Invoice Compliance List will continue to constrain zinc spot liquidity. However, from a long-term perspective, cleaning up inflated segments is conducive to improving the operating environment for physical trading enterprises. SMM will continue to track subsequent developments.

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