13 October 2011 08:26 [Source: ICIS news]
GUANGZHOU (ICIS)--The recent voting through of a US Senate bill, which will put pressure on China to increase the value of its currency, is expected to have a limited impact on China’s energy and petrochemical sectors, sources said on Thursday.
The US senate on 11 October voted through a bill that threatens to penalise China with tariffs for undervaluing the yuan to gain trade advantages.
Analysts said an appreciating yuan will benefit China’s energy and petrochemical industries as the country is a net importer of crude oil and raw chemicals.
China imported 239m tonnes of crude in 2010, accounting for more than 54% of its total needs, according to official statistics.
“Theoretically, an expensive yuan would boost its (China’s) purchase power and thus favour importing of crude and raw chemicals. But if downstream sectors are taking a hit, how would the upstream survive?” said Yi Tuanhui, an energy analyst at Shanghai-based stock broking firm Haitong Securities.
Some industry sources said a country’s demand for materials has little relation to the value of its currency.
“It’s not that we buy more when [the] yuan goes stronger and less when [the] yuan goes weaker. How much crude or raw chemicals we buy depends largely on prices and market needs, rather than exchange rates,” said Zhang Tong, an executive from oil trading firm China United Oil.
A polyolefin trader based in southern China said: “We look at prices in deciding whether and how much to buy in. We seldom consider currency value, which is actually something beyond our consideration.”
Furthermore, the US Senate bill will unlikely influence China’s energy strategies and policies, Zhang said.
The bill is more a political issue and is unlikely to be passed, analysts added.
“We think it’s hard [for the bill] to be passed by the House and Obama administration, as it’s unrealistic to solve economic problems through political ways,” said Yi.
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