Wild currency swings chill US resin exports
07 October 2008 22:40 [Source: ICIS news]
HOUSTON (ICIS news)--US polyethylene (PE) and polypropylene (PP) exporters face difficult business conditions as volatile currency markets add risk to resin transactions, traders said on Tuesday.
“Brazilian customers have to wait to pay us [for arriving cargoes]. They find this currency situation to be a disaster,” a trader said after the Brazilian real fell 7% against the US dollar on Monday.
“Prices are so unstable, customers are waiting and waiting,” the source added. “The only ones who buy a little are the ones who need to buy.”
In Chile, converters saw resin prices inflated by unfavourable exchange rates with regional exporters, so they preferred to buy locally from distributors, the source said.
The Mexican peso was another currency that lost significant ground to the dollar on Monday, trading at around 11.87 pesos/dollar compared with 11.23 pesos/dollar on the previous Friday.
Based on the dollar’s strength and high inventories of domestic material inside Mexico, a resin trader predicted October will be one of the worst months for US resin exports to Mexico.
The Mexican market, as well as other Latin American markets, has remained relatively open to US exports compared with Europe and Asia, where resin prices and demand have plummeted.
Further hindering trade, some US resin exporters to Latin America were limiting business to cash transactions because of the difficulty in securing credit insurance, sources said.
($1 = €0.74)
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By: David Barry
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