Stronger yuan is double whammy for Chinese steel exports

Steel exporters were unmoved as commodity markets on Monday rewarded Beijing's decision, which would boost China's buying power at a time of still-recovering global demand. On the Shanghai Futures Exchange, almost all contracts ended up for the session, and the LME Select contracts also gained during Asian trading hours. On the local equity market, steel shares rose broadly, with Baosteel advancing 2.8% for the session. "A stronger yuan will make dollar-denominated commodities relatively cheaper, which will increase China's imports, and this is the biggest factor behind today's sharp gains in the metal futures market," said Zhu Haitao, metal analyst at Shanghai Zhongcai Futures. A stronger yuan can help lower raw material import costs like iron ore, but will also cap production costs and so, any gains local steel prices, exporters warned. "From the perspective of increasing China's purchasing power, any positive result may be offset by weakening exports," said Fang Junfeng, a copper analyst at Shanghai CIFCO Futures. Already,...