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For Chinese producers, a stronger yuan has directly eroded export revenues when dollar-denominated sales are converted into local currency. A China-based ferrosilicon producer said the effect on profitability has been significant.
“When the exchange rate of USD to Yuan was around 7.3, $1,200-per-tonne ferrosilicon translated to about 8,760 yuan. Now at around 6.8, that falls to roughly 8,160 yuan – a drop of about 600 yuan per tonne,” the producer said. “If overseas prices don’t keep up, we simply stop exporting.”
The operational effect, meanwhile, remains limited because “we earn dollars and spend dollars,” particularly given the need to import raw materials such as manganese ore, he added.
Producers have increasingly pushed for higher dollar prices to offset the currency move, contributing to firmer international levels. A Malaysia-based producer said ferrosilicon is fundamentally priced against yuan-denominated costs, meaning a stronger Chinese currency effectively raises the floor for global prices.
“As costs are calculated in yuan, export prices depend on how much yuan we can recover,” the producer said. “If the yuan rises, international prices have to follow.”
Fastmarkets’ price assessment for ferro-silicon, 75% Si min, export, fob China was $1,180-1,220 per tonne on Wednesday May 6, moving upward by $75-115 per tonne from $1,105 per tonne on January 7 2026, representing a rise of about 6.8%-10% since the start of the year.
Fastmarkets’ price assessment for ferro-silicon, 75% Si min, cif Japan – which covers Chinese material shipped to Japan – was $1,200-1,240 per tonne on the same day, having moved upward by $110-150 per tonne from $1,090 per tonne four months ago on January 7 2026, representing a rise of around 10%-14%.
The effect is particularly pronounced for buyers exposed to weaker currencies. A Japanese trader source said the combination of a stronger yuan and a sharply depreciating yen has significantly increased import costs.
“If the RMB and USD are both strong relative to the yen, it’s not good for us,” the trader said. “Chinese producers raise dollar prices, and to avoid losses, we have to buy in dollars while selling in yen.”He added that the cost burden is increasingly being passed downstream. “Steel mills are absorbing the cost – they have no choice if they settle in yen.”
The currency dynamic reflects a broader macro trend, according to Yang Du, an RMB specialist and associate at the Moller Institute, University of Cambridge.“The appreciation of the yuan alongside a weakening yen creates a double squeeze for Japanese importers,” Du said. “With Chinese producers raising dollar-denominated prices while the yen weakens, import costs rise sharply in local currency terms, making it difficult for buyers to absorb the impact.”“Companies with stronger inventory and risk management capabilities may be better positioned to cushion the impact, but those relying heavily on domestic sales are more exposed to currency volatility,” he added.
Liquidity in the spot market has also deteriorated. A China-based trader said trading activity for 75% ferrosilicon has slowed markedly, with fewer deals concluded in recent weeks.“Liquidity is very weak, and it’s getting harder to do business,” the trader said, noting that shifting trade flows, including reduced reliance on Chinese re-exports of Russian material, have further tightened margins.Market participants said yuan appreciation is acting as a headwind for Chinese exports while reinforcing a broader price uptrend, with currency-driven cost pressures increasingly shared across the supply chain.
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