The yuan, the tightly controlled Chinese
currency, is trading at its highest level against the dollar
since July 2018, in a move which influences a wide range of
industrial minerals markets.
The Chinese currency fell sharply against
the dollar in June 2018, reaching lows of nearly 7 yuan to a
dollar in October. This was the lowest level since 2008.
This depreciation in the currency, which
is subject to tight government control, was seen as an
aggressive move against US trade sanctions, as it made Chinese
exports more competitive.
But the yuan sharply changed direction in
the week to January 11, rising by 1.3%. This is the sharpest
rise seen since 2005, and left the currency at its highest
point against the dollar since July 2018.
This has been interpreted as a peace
offering to US negotiators as trade talks continue.
The yuan-dollar exchange rate is a key
factor in global industrial minerals minerals markets, given
the dollar’s position as the currency of
international trade, and China’s position as both
a producer and consumer of minerals.
China is a major producer of a wide range
of industrial minerals, including refractory products,
antimony, barite and rare earths. It is also a major consumer
of a number of minerals produced elsewhere, including lithium,
ilmenite, and iodine.
The dollar exchange rate is a key factor
for these markets. A stronger dollar against the yuan means
that miners and producers in China can accept a lower
dollar-denominated price for their exports
This dollar effect has been noted in a
number of markets, suppressing the price of exports.
In the fourth quarter of 2018, titanium
dioxide sellers told Fastmarkets they were still able to make a
profit despite rapidly declining prices for the pigment, due to
the weaker yuan.
Fastmarkets assessed the price
of titanium dioxide pigment,high quality, bulk volume, cfr
Asia as falling to $2,600-2,300 by mid-November 2018 from
$2,600-3,000 per tonne at the start of October 2018.
And in August of last year, amid quiet
demand during the summer lull in main European markets, the
depreciation in the yuan contributed to driving down market
prices for some grades of bauxite and fused
alumina, despite restrictions on Chinese supply remaining
On August 9, Fastmarkets assessed the
price of fused brown alumina, 95% min Al2O3, refractory sized
(0-6mm), fob China, at $730-750 per tonne, unchanged from
three months earlier.