Chinese Exports Could Be Hit in 2012

According to many economists there is a genuine fear in China that exports could be hit in 2012 as a result of the on-going economic crisis in the US and EU, the continuing appreciation of the RMB and increasing trade protection measures.

The appreciation of the Chinese RMB continues at a modest pace.  However, it is sufficient to ensure that many Chinese producers are reluctant to offer fixed-price 12 month contracts.  The appreciation so far against the US$ has been 4% this year and it is anticipated that this will reach 6% by the close of the year.  This is a 20% appreciation in the last 4 years.

The Chinese governmental export tax rebate available throughout our industry is in real risk of being either reduced or removed during the latter part of this year.  The reason behind this is a wish to encourage growth of the domestic market in China as well as continuing environmental pressures.

The headline price for Brent Crude Oil hit $112/barrel recently, compared to prices over $125/barrel that were seen earlier this year.