BEIJING, June 21 -- China's signal of an end to the yuan's fixed rate to the dollar may not necessarily lead to higher imports of bulk commodities, said Judy Zhu, analyst at Standard Chartered Bank in Shanghai. Zhu made her comments in an interview from Shanghai today. The comments are her personal opinions, she added.

"People's knee-jerk reaction is always a yuan appreciation will lead to more imports of bulk commodities, but our analysis of empirical data showed there's no firm causal relation between the two. China's yuan has appreciated by more than 20 percent since 2005, but it's hard to quantify how much of the gains in commodities imports was because of the yuan and how much of that was a result of an expanding economy. So a yuan appreciation will be long and gradual process and its impact on commodity imports will depend on whether there's effective real demand from the economy or short-term speculation."

"In theory, yuan appreciation should benefit China's importers of bulk commodities like soybeans, cotton, copper and various mining products including iron ore and other metal ores as these commodities, priced in the dollar, will be cheaper. However, the real mechanism is not that simple. China's demand for commodities is influenced by multiple factors, including real demand from the downstream and stockpiling, on speculative and non-speculative activities. We expect speculative buying to increase on cheaper prices, if the appreciation is realized, but buying based on real demand will not immediately be encouraged by the appreciation as the downstream consumers are key to decide when to buy in alignment with their order books."

"The appreciation will support commodities prices in dollar terms in global markets as China will be able to accept higher prices in the dollar terms. Given China's big share of demand, e.g. around 30 percent for metals including copper, around 70 percent of seaborne iron ore trade, such support should not be overlooked."

"The magnitude of appreciation, or how much the yuan will appreciate, is important. As we expect small and gradual appreciation -- depreciation from time to time is also possible during this period -- its influence on China's commodities imports will only be felt over a long period of time."