24 July 2009 07:06 [Source: ICIS news]
By Prema Viswanathan
SINGAPORE (ICIS news)--?xml:namespace>
PP finished goods shipments out of India declined by 10-25% in May-June 2009 from the same period a year ago, PP converters said on Friday, adding that export volumes may continue to decline if demand from the US and Europe fails to pick up.
Falling exports, coupled with weakness in the domestic market, had forced some PP converters to lower operating rates at their plants to 75-90% from 100%, industry sources said.
“Earlier I used to export 60-65% of my total output, but in the past two months, the proportion of exports has fallen to 40%,” said a PP film processor.
The US and
“The huge downturn in consumer confidence in these importing countries has caused retail sales to plunge, denting our exports of packaging film,” he added.
Weak external demand was offsetting the benefits these export-oriented converters should have been getting from the depreciation of the Indian rupee.
“It is a shame that we cannot take advantage of the depreciating rupee by increasing our exports as we would normally have done,” said a PP raffia grade converter who sells raffia bags to the
“In the first quarter of this year, our exports to these countries continued to be robust, but in the second quarter, orders dropped,” he said.
Another PP raffia grade converter who sells geotextiles to the
Geotextiles are used mainly as a protective lining for roads, railroads and reservoirs.
“President Obama’s stimulus package has not yet given a boost to the
Returns from domestic sales were also declining due to increasing competition, which has prompted processors to lower prices in the Indian market, said a third PP processor.
“On the one hand, prices of PP resin raw material are on the rise [but] prices of our finished goods are falling. This is severely squeezing our margins,” he added.
PP raffia and film prices had risen to $1,150-1,220/tonne (€805-854/tonne) CFR (cost and freight)
Some converters, meanwhile, were resorting to alternative strategies to withstand the fall in exports.
One converter said he had increased his exports to
“The global financial crisis has not had much impact on consumption of plastic goods in African countries, so we are taking advantage of that to increase our market share there,” he said.
Another processor claimed that his company’s continuous focus on niche products and adherence to quality benchmarks had helped it to weather the downturn better than his colleagues in the export-oriented sector.
“We haven’t tried to get into the commodity grades, but have continued to focus on speciality products, which has helped us retain our customers,” he said.
($1 = €0.70)
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