POLL RESULTS: Yuan depreciation will hit Chinese demand for imported material
The recent depreciation of the yuan will hit Chinese demand for imported materials, according to a recent poll.
The recent weakening of the yuan will hit Chinese demand for imported materials, according to a recent poll.
Metal Bulletin asked readers in an online poll: “Will the recent depreciation of the yuan hit Chinese demand for imported metals and feed?”
A huge 67% of respondents answered “yes”.
A weaker domestic currency makes importing on a dollar-basis more expensive and less attractive, particularly when final sales are priced in yuan.
The yuan dropped nearly 1.4% in February and touched a 10-month low.
The yuan was trading at 6.135 to the dollar today, compared with 6.052 at the start of the year.
Chinese sources last week highlighted the impact of the recent depreciation on non-ferrous markets.
The weaker yuan, coupled with domestic smelter cuts, could dent the interest of Chinese alumina buyers in imported material, as opinion is divided on how much and for how long the yuan will fall, sources said.
Volatility in the currency is also expected to reduce the benefits for Chinese minor metals exporters from the recent depreciation in the yuan’s value, market participants said.
Chinese copper financing deals could, meanwhile, come under pressure along with the global copper price after the depreciation, analysts said last week.
London Metal Exchange copper prices were close to four-year lows earlier this week, as a result of China’s economic slowdown, credit concerns sparked by the Shanghai Chaori Solar debt default and the reduction of US quantitative easing measures.