World’s biggest pulp producer considers trading with China in yuan

China is the largest commodity buyer and accounts for 43% of Suzano’s pulp

Increasing tension between the US and China is the main concern for Suzano as it could damp demand and prices of pulp for a prolonged period

Reading Time:3 minutes

A Chinese bank worker prepares to count the stacks of 100 Chinese yuan notes at a bank in Hefei, east China’s Anhui province. Photo: AFP

Published: 9:46am, 9 May 2023Updated: 10:25am, 9 May 2023

Suzano SA, the biggest producer of hardwood pulp, is considering selling its products to China priced in yuan, adding to signs that the dollar is losing its dominance in commodity markets.

China’s currency is growing in importance and smaller customers there are requiring deals linked to the renminbi, Suzano Chief Executive Office Walter Schalka said in an interview from Bloomberg’s New York headquarters. China is the largest commodity buyer and accounts for 43% of Suzano’s pulp.

While the greenback remains dominant, the use of the renminbi in contracts for everything from oil to nickel is gathering speed. Sanctions that ensnared Moscow following its invasion of Ukraine have added to that pace. Schalka said he believes the dollar will become less relevant, but acknowledged there had not yet been a “major transition” to China’s currency.

Increasing tension between the US and China is the main concern for the company as it could damp demand and prices of pulp for a prolonged period, he said.

A clerk counts renminbi banknotes at a bank outlet in Hai’an city in eastern China’s Jiangsu province. Photo: AP

“China will become more relevant in the global market, I have no doubts,” Schalka said. “My own perception is that it would be much better to have a long-term collaboration between West and East, but what we see is increasing tension at this point of time.”